Traditional v/s DCF Methods

Traditional method

• The traditional method are also referred to as unsophisticated or non discounted cash flow method
• These method is known as non DCF because they do not take time factor into consideration
• These are the various Non DCF methods –

1. Pay back period
2. Accounting rate of return

DCF method

• The discounted cash flow method are also known as sophisticated or time adjusted methods
• This are known as DCF method because it take time factor into account
• The following are the various DCF methods –

1. Net present value
2. Internal rate of return
3. Profitability index