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Describe the six models of a capital budgeting decision

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Briefly describe the six models of a capital budgeting decision, which are typically defined as a 'go or no-go' decision. These are -

1. Payback period (standard)

2. Discounted payback period (modified from payback period)

3. Net present value (NPV) (standard)

4. Internal rate of return (IRR) (standard)

5. Modified internal rate of return (MIRR) (modified from IRR)

6. Profitability index (PI) (modified from NPV)

In reviewing these, which one(s) is appropriate for small projects and which one(s) is appropriate for larger projects? Why?

Selecting one of these models, can you provide an example by showing the model's calculation?

Reference no: EM132825841

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