Capital budgeting methods which do NOT incorporate time value of money are generally used for the initial stage of screening investment alternatives.

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Capital budgeting methods which do not incorporate time value of money, such as payback period and accounting rate of return, are commonly used in the initial stage of screening potential investment projects. However, more sophisticated methods that do incorporate time value of money, such as net present value and internal rate of return, are typically used for more in-depth evaluations of feasible projects.

Capital Budgeting Methods Which Do NOT Incorporate Time Value of Money