If you are currently slogging through of your Corporate Finance textbook, you know the drill: Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, and Profitability Index (PI).
But here is the truth: It is how billion-dollar companies decide whether to build a factory, launch a product, or buy back stock. If you are currently slogging through of your
| Technique | Acronym | Decision Rule | | :--- | :--- | :--- | | Net Present Value | | Accept if NPV > 0 | | Internal Rate of Return | IRR | Accept if IRR > WACC | | Payback Period | PB | Accept if < cut-off period | | Profitability Index | PI | Accept if PI > 1.0 | Internal Rate of Return (IRR)