## Decision Rules for Capital Budgeting Techniques
Techniques split into Non-Discounted (ignore time value of money) and Discounted (account for it). The accept/reject rule for independent projects differs from the selection rule for mutually exclusive projects.
### Non-Discounted Techniques
| Technique | Independent project | Mutually exclusive |
|---|---|---|
| Payback Period | Accept if Payback ≤ Maximum Acceptable Payback; Reject if ≥ | Select the project with the least payback period |
| Accounting Rate of Return (ARR) | Accept if ARR ≥ Minimum Acceptable Rate; Reject if ≤ | Select the project with the maximum ARR |
### Discounted Techniques
| Technique | Independent project | Mutually exclusive |
|---|---|---|
| Net Present Value (NPV) | Accept if NPV > 0; Reject if NPV < 0 | Select the project with the highest positive NPV |
| Profitability Index (PI) | Accept if PI > 1; Reject if PI < 1 | When NPVs are equal, select the project with the highest PI |
| Internal Rate of Return (IRR) | Accept if IRR > K (cost of capital); Reject if IRR < K | Select the project with the maximum IRR |
> Memory hook: For independent projects each technique has a threshold (max payback, min rate, 0, 1, K). For mutually exclusive projects you pick the single best on that metric.