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There are five main techniques which most companies today use to appraise investment projects. They are the projects Payback Periods, Accounting Rate of Return (ARR), Net Present Value (NPV), Internal Rate of Return (IRR) and Profitability Index. These techniques all have their own strengths as well as weaknesses. This essay is focusing upon reviewing these techniques and evaluating their strengths and weaknesses. Payback Periods It is one of the simplest and most frequently used methods of capital investment appraisal. A method of capital budgeting in which the time is required before the projected cash inflows for a project equal the investment expenditure is calculated; this time is compared to a required payback period to determine whether or not the project should be considered for approval. The faster capital is returned from an investment, the more rapidly it can be invested in other project. There have obvious deficiencies, payback computations ignore the...

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