## Capital Budgeting Techniques - Overview
Selecting the most profitable investment projects maximises shareholder return; a bad long-term decision can be devastating financially and strategically. Appraisal techniques fall into two families:
```
Capital Budgeting Techniques
|
+-- Traditional / Non-Discounting (ignore time value of money)
| +-- Payback Period
| +-- Accounting Rate of Return (ARR)
|
+-- Time-adjusted / Discounted Cash Flow (consider time value)
+-- Net Present Value (NPV)
+-- Profitability Index (PI)
+-- Internal Rate of Return (IRR)
+-- Discounted Payback Period
+-- Modified Internal Rate of Return (MIRR)
```
Key distinction: Non-discounting techniques do NOT discount future cash flows; discounting (present value) techniques DO consider the time value of money.