Techniques of Capital Budgeting

It may be grouped in the following two categories:-

(A) Discounted cash flow (DCF) Criteria.

  1. Net present value (NPV)
  2. Internal Rate of Return (IRR)
  3. Profitability Index (PI)
  4. Discounted Payback Period.

(B) Non-discounted Cash flow Criteria:

  1. Pay back period (PB)
  2. Accounting rate of return (ARR)