Therefore, one area of ​​concern for financial managers is capital budgeting. Capital budgeting is about managing a company's long-term investments, requiring financial managers to project financial decisions into the future. Therefore, financiers must use capital budgeting techniques to determine whether or not their future financial decisions will be beneficial and which projects will add the most value to the company. One technique used is the payback period. The payback period is a method used to find out the amount of time it takes for an investment to produce enough cash flow to recoup the initial cost. For example, a project costs $1,000 and the business earns $200 a year after taxes. The company will recoup the $1,000 in five years. If five years (payback period) is less than the stipulated number of years, the investment is acceptable, however, if it is more than that, the investment should be rejected. While the payback period is quick and simple, it is generally used for smaller investments and should be strengthened with other techniques such as net present value (NPV). NPV is another technique used in capital budgeting decisions. NPV discounts all of an investment's cash flows to the present by adding inflows and subtracting outflows. Therefore, if the NPV is greater than zero, value is added to the firm and the project should be accepted. While values ​​less than zero indicate that the value is destroyed and the file