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)
“No wealth can buy the requisite leisure, freedom, and independence which are the capital in this profession. It comes only by the grace of God. It requires a direct dispensation from Heaven to become a walker. You must be born into the family of the Walkers. Ambulator nascitur, non fit.”
—Henry David Thoreau (1817–1862)
“I believe in women; and in their right to their own best possibilities in every department of life. I believe that the methods of dress practiced among women are a marked hindrance to the realization of these possibilities, and should be scorned or persuaded out of society.”
—Elizabeth Stuart Phelps (1844–1911)