Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 232

What would you choose as your investment tool?

! Given the advantages/disadvantages outlined for each of the different

decision rules, which one would you choose to adopt?

a) Return on Investment (ROE, ROC)

b) Payback or Discounted Payback

c) Net Present Value

d) Internal Rate of Return

e) Profitability Index

Generally, most students pick the NPV rule and a few pick IRR.