Comparative Analysis of the Traditional Models for Capital Budgeting

M. J. Alhabeeb

International Journal of Marketing Studies, 2016, vol. 8, issue 6, 16-32

Abstract: Financial decision making for investing firms requires metric tools for comparison and analysis. The managerial choice among many investment alternatives with complex possibilities has made it easier to rely on the now more advanced computer programs of simulation that considers the uncertainty and stochastic changes in the cash flow and risk levels. The major drawback here, especially in the academic world, is the increasing dependency on software and departing from the underlying mathematical reasoning that is most practically fathomed by the manual problem solving. This paper goes back to the tradition on analyzing and comparing the major models of capital budgeting.

Keywords: capital budgeting; project evaluation; net present value; internal rate of return; profitability index; payback method; crossover rate; ranking reversal (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijmsjn:v:8:y:2016:i:6:p:16-32

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