accept-reject rulethe decision rule is to accept
Accept-Reject Rule:
The decision rule is to accept the project if the computed payback period is less than the standard. If not, reject it. While ranking the projects, project with shortest payback period is assigned the top most rank.
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features of capital budgeting decisions1 existence of potentially large anticipated profits2 involves
traditional capital budgeting techniquesthese techniques are usually very simple and easily catchable but the fundamental drawback of these
advantages of arr it is simple to calculate and easy to catch with the help of this technique direct comparisons among proposed projected of varying
pay back period pbp this is the most popular method employed by industrial practitioners for ranking investment projects this is described as the
accept-reject rulethe decision rule is to accept the project if the computed payback period is less than the standard if not reject it while
advantages it is easy to calculate and catch with the help of this technique projects can be ranked in terms of their economic merits without much of
modern discounting cash flow techniques these methods generally are of more use to businesses in their investment decisions they take into account
net present value npv in this technique future cash flows are discounted to the present and then compared with the investment outlay the basic
internal rate of return irr this rate attempts to find the earnings rate which equates the current value of the streams of earnings to the investment
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