This document compares three capital budgeting methods: net present value (NPV), internal rate of return (IRR), and profitability index (PI). It defines each method and provides examples of how to calculate NPV, IRR, and PI. It also discusses the key differences between NPV and IRR. NPV considers the discount rate as a known factor, while IRR calculates the discount rate. NPV evaluates additional wealth, while IRR cannot. NPV is more flexible when cash flows change. The document outlines acceptance criteria for each method and their suitability for long-term versus short-term projects.