Evaluation  TECHNIQUES 

This section discusses the important evaluation techniques for capital budgeting. Included in the methods of appraising an investment proposal are those which are objective, quantified and based on economic costs and benefits. The methods of appraising capital expenditure proposals can be classified into two broad categories: (i) traditional, and (ii) time-adjusted. The latter are more popularly known as discounted cash flow (Den techniques as they take the time factor into account. The first category includes (i) average rate of return method and (ij) pay back period method. The second category includes (i) net present value method, (ij) internal rate of return method old  net terminal value method and profitability index.

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