Although there is multiple capital budgeting methods, the most efficient is the Internal Rate of Return
method. Since is a method that uses time value of money, therefore it can be used by itself taking in
count the periods after the initial investments have been paid and this method considers all cash flows
from a project, is ready to compute when the cash flows are even and even though it may need some
trial and error when the cash flows are uneven because the IRR is a percent it easier to compare projects
with different investment amounts. Most surveys made in managements consistently shoe the IRR
method as the most used, but in the end most companies use more than one method, based on their
needs.
Source:
Wild, J. J., Shaw, K. W., & Chiappetta, B. (2016). Financial and managerial accounting: information for decisions (6th
ed.). New York, NY: McGraw-Hill Education