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Tech Buzzard's Capital Budgeting Decision Summary

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Tech Buzzard's Capital Budgeting Decision Summary
TECH BUZZARD’s CAPITAL BUDGETING METHOD

The type of capital budgeting preferred for Tech Buzzard is the Net Present Value method. The initial outlay of cash to get my firm started is low which makes the risk low. Tech Buzzard will start as a part time venture out of my home with very little of my own capital investment to lose. Never-the-less, I will use NPV as the primary analytical tool but I will also look that the IRR and Profitability Index for a more informed view of the payback period.

PAYBACK PERIOD RULE IS LIKE A MEAT CLEAVER

I would not want a C-Section with a meat cleaver, nor would I want to run my business using just the payback method. The payback period rule alone is a clumsy way to evaluate risk in that it just looks
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