Distinguish between the 3 capital investment techniques of (1) Net Present Value, (2) Internal Rate of Return, and (3) Payback Method.


Write a minimum of 175 words:

Distinguish between the 3 capital investment techniques of (1) Net Present Value, (2) Internal Rate of Return, and (3) Payback Method.


Describe what you consider to be the top 2 advantages and 2 disadvantages of each technique and provide an example to support your top advantage of each method.


Distinguish between the 3 capital investment techniques of (1) Net Present Value, (2) Internal Rate of Return, and (3) Payback Method.


You’ve probably heard of the three capital investment techniques: Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Method. But what do they all mean? And how do you use them? Here’s a quick guide to help you understand which technique is best for your particular situation.

Net Present Value (NPV)

Net Present Value (NPV) is a measure of the profitability of an investment. It is calculated by taking all future cash flows and calculating the present value of each one. The sum of these values gives you your net present value.

This method can be used to determine whether or not it’s worth spending money on something today, because if you spend $100 today, but that same $100 will have years later in retirement when you’re much older and retired from work/schooling etc., then it might not be worth spending that money now because after paying taxes on whatever income it produces during its lifetime, there won’t be much left over for retirement savings unless someone comes up with some clever way around taxes altogether!

Internal Rate of Return (IRR)

The internal rate of return (IRR) is a rate of return that equates the present value of all cash flows with the initial investment. An IRR can be used to compare capital investment opportunities, evaluate projects that have multiple cash flows and calculate payback periods.

Examining an example: Suppose we have $100,000 to invest at an interest rate of 10% per year for 5 years, compounded annually. We also know that our net income after tax will be $20,000 per year for each year (assuming no taxes). Since this sum is less than our original investment cost ($120K), we want to make sure we are getting good value from our money by evaluating whether or not this project has enough ROI potential before committing more funds into it.

Payback Method

Payback Method:

The payback method compares the cost of an investment to the cash inflows that it generates. It’s also known as the net present value (NPV) or internal rate of return (IRR) method, in which you compare your investment’s NPV with its initial value, plus any earnings on those investments. The faster your payback period, the better—that is, if you can earn more money than what was invested within a year or less then this would be considered better than one with a longer payback period that takes multiple years before seeing returns match outlay costs. In other words: If someone gives you $10 today but it takes three years before they see anything come back in return for their generosity then they’re losing out on $3 per year because there’s no way around having to wait so long between giving someone something and getting something back from them!

You need to understand the three different capital investment techniques.

You need to understand the three different capital investment techniques.

Net Present Value (NPV) is used to compare different projects. Internal Rate of Return (IRR) is used to compare similar projects. Payback Method is used to compare projects with different payback periods


Capital investment is the process of investing money in order to get a return on it. Capital investments are made in order to generate revenue and increase profitability. There are three different techniques used by companies when calculating their capital investments: Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Method. Each technique has its own strengths and weaknesses depending on the situation at hand, but it’s important for investors to understand how they work so they can make an informed decision about which method would be best for their company’s situation.

Get 20% Discount on This Paper
Pages (550 words)
Approximate price: -

Try it now!

Get 20% Discount on This Paper

We'll send you the first draft for approval by at
Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

Ace Writing Center has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.


Essay Writing Services

At Ace Writing Center, Nowadays, students normally have extremely busy schedules. You will note that some of them have to take on some evening or weekend jobs in order to get some income that can help them to sustain in college or in the university. This can deny them a chance to write all the essays given. Others usually get bombarded with a lot of work by their lecturers. This can still delay such students from working on all their essays. However, some of them usually try to work on all these essays but end up delivering their work late. This can prevent them from graduating since most lecturers are strict on deadlines. If you want to write a business essay, the wise way is to hire an outstanding essay writing service like us, so that you can get the best results. If you are keen, you will note that many companies usually overcharge their customers. Some of them are there only to make money. And in reality, they really don’t care to build a long term commitment with students. You should not choose such companies. You should take your time and choose a reliable company to work with. Ace Writing Center is the ultimate solution for you. We have been offering our writing service for more than 7 years. This is a clear indication that you will get quality essay writing service. We have a wide range of writers who can work on any business essay that you might have. We believe in doing extensive research so that we can provide quality work to all our clients. .


Admission and Business Papers

Have you ever had to write an admission essay for college? The majority of students face the same issues when applying to a university or college and many in such situations decide they need professional help to cope with this matter. They get in a situation when the deadline keeps coming closer but lack motivation to start because they are just not sure if their writing skills are strong enough. We have a solution for you! Ace Writing Center is the best admission essay writing service with a large professional team and years of experience in providing high-quality papers to students of all levels and faculties. The mission of our team is to help students make their dreams of entering a good college come true and that’s what we offer!.


Editing and Proofreading

Sometimes all the words for your paper just flow out of your mind and into your fingers. You type quickly at your keyboard and there they are, your beautiful words right there on the screen. But you have no idea how to polish it up. You may be wishing there was a paper writing service that offered this type of writing service. Look no more! Here at Ace Writing Center, we offer you an editing and proofreading option that you can't find anywhere else..


College Essay Writing

In case you are familiar Ace Writing Center, you know the way to distinguish a better company from a cheap one exactly. First of all, poor service website does not have a sufficient support. We think support team is an essential part of success; it has to answer all clients’ questions and be a connecting link between clients and their writers. On our web-service you will get answers about anything you need and your writer will receive all your instructions, assignments and requirements exactly and swiftly. A writing service that we run has got a flexible pricing system that will save you from senseless wastes and many bonus systems that let you sparing money for something important for you.

You cannot copy content of this page
Open chat
Hello. Can we help you?