Terminal Value Method is based on the assumption that cash inflows of each year is reinvested in another in another outlet at a certain rate of return till the economic life of the project. Decision Criteria If IRR > Cost of Read More …
Internal Rate of Return (IRR) Method
Internal Rate of Return (IRR) is also known as Time-adjusted rate of return. IRR is the rate at which NPV becomes zero. In other words, we could say that IRR is the rate at which present value of cash inflows Read More …
Profitability Index method
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 Read More …
Net Present Value Method
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 Read More …