The Extent of Using Capital Budgeting Techniques in Evaluating Manager’s Investments Projects Decisions (A Case Study on Jordanian Industrial Companies)

Abstract

The aim of this research paper is to study the extent of using capital budgeting techniques on choosing the suitable project for investment. The current research study focused on capital budgeting techniques such as Net Present Value NPV, and Internal Rate of Return IRR, and Pay Back period PB, which is considered the main tools in the hands of decision makers in deciding the best possible alternative of investment. In order to achieve the purposes of the study a questionnaire have been created (based on Graham and Harvey survey in 2001), the aim was to cover most of the Jordanian industrial companies despite of their size and ownership in the current year 2017. Resolution data were analyzed using the statistical program SSPS. Finally, the study concluded that, 58% of Jordanian industrial companies use the Net Present Value, 22% use the Payback Period, 12% use the Internal Rate of Return, and the remaining used a combination of the Accounting Rate of Return, Profitability Index, and sensitivity analysis. The current research study is expected to assess management in choosing the best capital budgeting technique in the evaluation of its future investment projects.

The Extent of Using and Trusting Capital Budgeting Methods in Projects Appraisal in Palestinian Corporations

“…The above result is aligned by many literature mentioned above such as Pšunder (2012), Shinoda (2010), Khamees et al (2010) and Brijlal and Quesada (2009). On the other hand, many of previous literature have an opposite result such Ryan and Ryan (2002), Kengathran (2016), Shaban et al (2017) and El-Daour and Abushaaban (2013).…”

“…The paper finds Profitability Index is most used in such sector followed by the payback period. Unlike Shaban et al (2017) who conduct the paper base on industrial sector in Jordan as well. The paper finds the net present value (58%) followed by the payback period (22%), IRR (12%) and the remaining for the Accounting Rate of Returns and the Profitability Index.…”

Financial Feasibility Analysis of Shrimp Vannamei (Litopenaeus vannamei) Culture in Intensive Aquaculture System with Low Salinity

“…Profitability index atau biasa disebut dengan konsep B/C Ratio, merupakan rasio dari jumlah nilai saat ini dari penerimaan usaha dengan jumlah nilai saat ini dari investasi selama masa umur investasi berjalan (Kasmir & Jakfar, 2012). Profitability index dapat ditentukan dengan membagi nilai kas bersih perusahaan yang telah di diskonto dengan nilai investasi awal usaha, apabila nilai PI lebih dari 1 maka usaha dikatakan layak, dan apabila nilai PI kurang dari satu maka usaha tidak layak (Shaban et al, 2017). Dari hasil analisis dengan tingkat discount factor 10% yang mengacu pada pendapat Gittinger (1986) bahwa pada negara berkembang seperti Indonesia tingkat pengukuran discount factor suatu usaha diasumsikan berkisar antara 8-15% dalam nilai sebenarnya.…”

Untitled

“…Accurate prediction of changes in price can reduce the risk and improve returns (Lu et al 2020). The complexity of stock price prediction involves various factors, including market trends, economic indicators, company performance, news sentiment, and more (Shaban and Al-Zubi 2014). Accordingly, stock prices are said to follow the 'random walk hypothesis' and their price prediction is hard, if not impossible.…”