Gas Station A Is Paid Back In 2 Years; Cf1 In Year 1,

AnswerRequired: Compare the results of the three (3) methods by quality of information for decision making. Using what you have learned about the three (3) methods, identify the best project by the criteria of long term increase in value. (You do not need to do further research.) Convey your understanding of the Time Value of Money principles used or not used in the three (3) methodsCapital Budgeting is a process of long range planning involving investment of funds in long term activities whose benefits are expected over series of years. For example, installing machinery, creating additional capacity to manufacture a part of the machinery which at present is purchased from outside.Comparisons between different types of capital budgeting techniques are as follows:-Sl.NONET PRESENT VALUEINTERNAL RATE OF RETURNPAYABACK PERIOD1.The net present value (NPV) is the present value of The future cash flows after tax less initial investment outlay.The NPV depicts the change in owner’s wealth if project is accepted.The Internal rate of return (IRR) is the rate of return that makes the present value of the future after - tax cash flows equal to Investment outlay. It is one of the most commonly