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In response to a call for more research on the “why” of capital budgeting practices, a survey was sent to the Fortune 500 firms to (1) look at the detailed reasons they used particular capital budgeting techniques, (2) to determine if and why they had changed their emphasis on any of those techniques in the last five or ten years, and (3) to explore the importance of strategic considerations in capital budgeting. Detailed reasons and their rankings are given for the choices of payback, discounted payback, accounting rate of return, internal rate of return, modified internal rate of return, profitability index, net present value, and other miscellaneous techniques.
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1997
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