Question

NET PRESENT VALUE...: NPV

are there other tools we can use beyond NPV, what are they?

And what is the difference between a screening decision and a preference decision?

Answer 1

Net present value is one of the most important capital budgeting decision making tool and there are other tools like internal rate of return along with modified internal rate of return and discounting payback period along with payback period and equivalent annual annuity method which are used under different circumstances in order to make capital budgeting decisions and they will be applied in different projects under different circumstances to make the best possible decisions and to select the best possible products.

So, we can use internal rate of return, modified internal rate of return, discounting payback period, payback period, equivalent annuity method.

Screening decisions are related to capital budgeting decisions in which it is seen whether a particular project rate of return is crossing the hurdle rate of the company or not.

budgeting preference decision are related to decision making between two projects in which best one is selected according to the passes of the hurdle rate.