2 Methods of capital budgeting

In earlier articles, we have discussed the capital budgeting and its types. Today we will discuss the methods of capital budgeting:

(I)Traditional methods

i) Pay back period method: this method means the period in which the total investment in the permanent assets pays back itself. This method is based upon the concept that every capital expenditure pays itself back within a certain period of time. Thus, this method measures the period of time means the time taken where the cost of project is recovered from the earning of the project itself. Continue reading “2 Methods of capital budgeting”