Other Measures: Other Measures than NPV and IRR 1.There are other measures used in capital...

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Other Measures: Other Measures than NPV and IRR  1.There are other measures used in capital budgeting decisions other than NPV and IRR. What are those measures?What are their weaknesses as compared to NPV/IRR? (After answers, ask a follow-up question).    Capital Budgeting: Metrics used in Capital Budgeting (250 words)  2. Are financial metrics such as Net Present Value (NPV), Internal Rate of Return (IRR), and Modified Internal Rate of Return (MIRR) superior to Return on Investment (RoI), Return on Assets (RoA), and Payback Period (PBP)? (After answers, ask a follow-up question).   Why or why not?    
	
Document Preview: IN AROUND 250 WORDS, PLEASE REPLY TO EACH QUESTION.  PROVIDE CITATION/REFERENCE IF USED.  FOR EACH DISCUSSION QUESTION, FOLLOW-UP WITH A QUESTION (ONE QUESTION FOR DQ1, AND ONE QUESTION FOR DQ2).  DO NOT REPLY WITH PREVIOUS WRITTEN SOLUTIONS—MUST BE FRESHLY WRITTEN FOR THE FIRST TIME!!!Other Measures: Other Measures than NPV and IRR (250 words)There are other measures used in capital budgeting decisions other than NPV and IRR. What are those measures?  What are their weaknesses as compared to NPV/IRR? (After answers, ask a follow-up question).      Capital Budgeting: Metrics used in Capital Budgeting (250 words)Are financial metrics such as Net Present Value (NPV), Internal Rate of Return (IRR), and Modified Internal Rate of Return (MIRR) superior to Return on Investment (RoI), Return on Assets (RoA), and Payback Period (PBP)?  (After answers, ask a follow-up question).       Why or why not?

Robert · Accepted Answer

SOLUTION 1: 
Capital Budgeting is a planning instrument used by the companies for evaluating long term 
investments. It checks whether investment in a particular project shall be made or not. The most 
commonly used method of capital budgeting are Net Present Value and Internal Rate of Return. 
The measures other than Net Present Value and Internal Rate of Return are Pay Back Period, 
Accounting Rate of Return, Profitability Index, and Modified Internal Rate of Return.  
The payback period calculates the time needed to cover initial investment made. The Accounting 
Rate of Return computes the return generated by project. Profitability Index also known as 
Benefit Cost Ratio calculates the relationship between cost and benefit associated with a 
particular investment. Modified Internal Rate of Return is a measure similar to internal rate of 
return and is used for the calculation of return from the project. 
The weaknesses of some these methods are non-usage of time value of money concept. These 
techniques are not primarily used because of vague results produced by them. The results 
produced by them are not universally accepted.

Other Measures: Other Measures than NPV and IRR 1. There are other measures used in capital budgeting decisions other than NPV and IRR. What are those measures?What are their weaknesses as compared to...

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