FINANCIAL MANAGEMENT

Presented by
Poornima.N
Reg.No. 19MBA514.
 May 2019 Question Paper
Section –B
Module-5
Q.2) What is capital budgeting ? Explain the various techniques of
evaluating the investment project.
Capital budgeting :- capital budgeting is a method of analyzing and
comparing substantial future investment and expenditures to determine
which ones are most worthwhile. In other words , its process that
company management uses to identify what capital projects will create
the biggest return compared with the funds invested in the projects. Each
project is ranked by its potential future return, so the company
management can choose which one to invest first.
Discounted cash flow methods (modern method).
1) Net present value (NPV)
2) Internal rate of return (IRR)
3) Profitability index (PI)

. Non-discounted cash flow methods (traditional method).

4) Pay back period (PB)
5) Accounting rate of return (ARR)
THANK YOU…