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Capital budgeting techniques

Capital budgeting techniques are used in finance to decisive the worth of projects or assets. The success of a project depends on the correct use of capital budgeting technique as it will eventually result in profit or loss. The current article “The Extent of Using Capital Budgeting Techniques in Evaluating Manager’s Investments Projects Decisions” by Osama Samih Shaban, Ziad Al-Zubi and Ahmad Adel Abdallah is examining the extent of use of different capital budgeting techniques in selecting the suitability of the project for investment.

The study was conducted in the industrial sector in Jordan. The primary data was collected using a survey questionnaire grounded on Harvey survey in 2001 is used to prove the use of these tools in evaluating different projects. The survey included 10 questions based on capital budgeting techniques ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"NsDbLKHO","properties":{"formattedCitation":"(Shaban et al.)","plainCitation":"(Shaban et al.)","noteIndex":0},"citationItems":[{"id":2623,"uris":["http://zotero.org/users/local/KZl8ZL3A/items/X24DXN6P"],"uri":["http://zotero.org/users/local/KZl8ZL3A/items/X24DXN6P"],"itemData":{"id":2623,"type":"article-journal","title":"The Extent of Using Capital Budgeting Techniques in Evaluating Manager¡¯ s Investments Projects Decisions (A Case Study on Jordanian Industrial Companies)","container-title":"International Journal of Economics and Finance","page":"175-179","volume":"9","issue":"12","author":[{"family":"Shaban","given":"Osama Samih"},{"family":"Al-Zubi","given":"Ziad"},{"family":"Abdallah","given":"Ahmad Adel"}],"issued":{"date-parts":[["2017"]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Shaban et al.). For secondary data, articles were used by well-known publishers. The results showed the use of the Net Present Value by 58% of Jordanian industrial companies. The use of Payback Period by 22% of companies and the Internal Rate of Return by 12% of companies.

The study results are not biased as these are evaluated based on the quantitative method. There is use of both primary and secondary data to remove any unbiasedness. There is also the use of Harvey survey for the collection of data. I agree with the results that different techniques such as net present value NPV, and internal rate of return IRR, and payback period PB are main tools used by decision-makers while deciding for investments. These are effective techniques as these take into consideration the time value of money. Among different available techniques, Net Present Value has a considerable use by different decision-makers. The method's effectiveness relies on the decision of an acceptable rate of return. Decision makers must select it carefully while evaluating different options.

Works Cited

ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Shaban, Osama Samih, et al. “The Extent of Using Capital Budgeting Techniques in Evaluating Manager¡¯ s Investments Projects Decisions (A Case Study on Jordanian Industrial Companies).” International Journal of Economics and Finance, vol. 9, no. 12, 2017, pp. 175–79.