Modern / Discounting Cash Flow Techniques : These methods generally are of more use to businesses in their investment decisions. They take into account the time value of money and adjust their cash flows consequently before taking a decision. That is the reason why they are measured superior to the traditional methods. There are four techniques under this category of methods. They are -
- Net present value (NPV)
- Internal rate of return (IRR)
- Profitability index (PI)
- Discounted Payback Period (DPBP)