Author(s): Sofia Petrova
Capital budgeting is a critical financial management process used by organizations to evaluate long-term investment opportunities and allocate resources effectively. The choice of capital budgeting methods significantly impacts financial performance, profitability, and shareholder value. This paper examines the most commonly used capital budgeting methods, including Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, and Profitability Index (PI), and analyzes their influence on decision-making and organizational outcomes. The study highlights the importance of selecting appropriate methods aligned with organizational strategy and risk appetite to optimize financial performance.