SAB7#022 Project Selection Method

Annotations:

• Choose the nearest Date

1. Payback period intuitively measures how long something takes to "pay for itself."

1. The operation of evaluating a present sum of money some time in the future is called a capitalization (how much will 100 today be worth in 5 years?)

Annotations:

• Choose the highest

1. IRR is a rate of return used in capital budgeting to measure and compare the profitability of investments.

Annotations:

• Choose above 1

1. CBA is a systematic approach to estimating the strengths and weaknesses of alternatives that satisfy transactions, activities or functional requirements for a business.

Annotations:

• Choose the highest

1. NPV is determined by calculating the costs (negative cash flows) and benefits (positive cash flows) for each period of an investment