Capital Budgeting – The Tools for Project Evaluation

26 Pages Posted: 22 Feb 2021

Date Written: December 10, 2020


As the objective of the capital budgeting is to add values to the wealth of an owner of a business, the capital budgeting primarily insists the recovery of investments made in the projects. To improve the owner’s wealth, it is important to evaluate and identify profitable projects using some evaluation tools. Concerning the project evaluation, there are traditional and non-traditional tools in application to evaluate the projects in finance and financial management. In this context, this paper illustrates the project evaluation techniques contextually with specific exhibits as examples to make the reader to understand them.

Keywords: Capital Budgeting, Project Evaluation, Payback Period, NPV, IRR, MIRR, Profitability Index, Time-adjusted Discounted Model

JEL Classification: G3, G30, G31, G32, H43, M41, O22, Z33

Suggested Citation

Senthilnathan, Samithambe, Capital Budgeting – The Tools for Project Evaluation (December 10, 2020). Available at SSRN: or

Samithambe Senthilnathan (Contact Author)

International Training Institute ( email )

PO Box 6322
Scratchley Road, Badili
Port Moresby, National Capital District
Papua New Guinea

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