Techniques of capital budgeting
There are a number of capital budgeting techniques used in the evaluation of a project. They are broadly classified under two categories:
1] Discounted cash flow methods:
• Net present value. (NPV)
• Internal rate of Return (IRR)
• Profitability index (PI)
• Discounted payment period (DDB)
• Modified internal rate of return (MIRR)
2] Non-Discounted cash flow methods:
• Payback period
• Accounting Rate of Return (ARR) (I.M. Pandey, 2005).