Category: B.COM NOTES

Profitability Index method is also known as Benefit-Cost Ratio Method. It is based on Net Present Value method and calculates the benefit on per rupee investment. Merits of PI It is superior to NPV It gives due consideration to the time value of money and cost involved in the project. PI techniques give better result in case of projects having different Read More …

The Net Present Value Method (NPV) Method is a discounted cash flow technique. This method compares between cash inflows and cash outflows occurring at the different time period. The major characteristic of this method is that it takes into account the time value of money and all cash inflows and outflows are converted to present value. Note: If working capital Read More …

Accounting rate of return method is also called  financial statement method or unadjusted rate of return method. Decision Criteria In case of many projects, a project with higher ARR or NOI will be selected. In case of only one project, it would be selected if it earns more than companies predetermined required rate of return. Advantages of Accounting Rate of Read More …

Payback Period Method  is the simplest and most widely used method. Payback period is the time required to recover the initial investment. A firm is always interested in knowing the amount of time required to recover its investment. It is based on the concept of cash flow and is a non-discounting technique. Formula for Payback period To apply this formula, Read More …