Capital budjeting & appraisal methods
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The document discusses various capital budgeting and investment appraisal methods used to evaluate long-term investment projects. It defines capital budgeting as the formal process of planning and acquiring capital assets and explains why it is important. Several evaluation techniques are covered, including payback period, net present value (NPV), internal rate of return (IRR), and accounting rate of return. The key criteria for accepting or rejecting projects using these methods are also provided.
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Capital budjeting & appraisal methods
- 1. CAPITAL BUDGETING & INVESTMENT APPRAISAL METHODS PRESENTATION BY PROF. V.RAMACHANDRAN SIESCOMS, NERUL, NAVI MUMBAI
- 16. Pay –back period method Rs.19000 is recovered in 3years and Rs.1000 is left out of initial investment. The cash inflow in 4 th year is Rs.4000 which indicates that pay-back period is in between 3 rd and 4 th year.i.e.3+(1000/4000) = 3.25 years Year Cash Inflows Cumulative cash inflows 1 6000 6000 2 8000 14000 3 5000 19000 4 4000 23000 5 4000 27000
- 28. CAPITAL BUDGETING & INVESTMENT APPRAISAL METHODS Thank you