We can find three alternatives available to the Guillermo’s Furniture Store. The three alternatives are keeping itself in the current position, make it high-tech and become a broker. So the projects that can be taken by Guillermo’s furniture store are dividend into Current Project, High-Tech Project and the Broker Project.
As Guillermo’s furniture store have to choose the best option among these projects that can give a competitive advantage to it. As we know that the managers use capital budgeting techniques to find out the best project among the bunch of projects that are mutually exclusive. To find out the best option there are various types of capital budgeting techniques. These capital budgeting techniques are:
- Simple Payback, and
- Discounted Payback
- Net Present Value (NPV)
- Internal Rate Of Return (IRR)