Alternative Capital Budgeting Methods
- Adjusted present value (APV): adjusted present value, is the net present value of a project if financed solely by ownership equity plus the present value of all the benefits of financing.
- Accounting rate of return (ARR): a ratio similar to IRR and MIRR
- Cost-benefit analysis: which includes issues other than cash, such as time savings.
- Internal rate of return: which calculates the rate of return of a project while disregarding the absolute amount of money to be gained.
- Modified internal rate of return (MIRR): similar to IRR, but it makes explicit assumptions about the reinvestment of the cash flows. Sometimes it is called Growth Rate of Return.
- Payback period: which measures the time required for the cash inflows to equal the original outlay. It measures risk, not return.
- Real option method: which attempts to value managerial flexibility that is assumed away in NPV.
Read more about this topic: Net Present Value
Famous quotes containing the words alternative, capital and/or methods:
“If you have abandoned one faith, do not abandon all faith. There is always an alternative to the faith we lose. Or is it the same faith under another mask?”
—Graham Greene (1904–1991)
“Capital as such is not evil; it is its wrong use that is evil. Capital in some form or other will always be needed.”
—Mohandas K. Gandhi (1869–1948)
“We can best help you to prevent war not by repeating your words and following your methods but by finding new words and creating new methods.”
—Virginia Woolf (1882–1941)
Related Phrases
Related Words