Abstract
Using a questionnaire on the investment evaluation techniques used for capital investment decisions by Japanese companies in 2011, we found that the payback period, cost comparison, and breakeven methods were the most frequently used, respectively. This suggests that there is greater diversity in the investment evaluation techniques used by Japanese companies than we originally recognized. Based on a literature review of both methods, we identified two basic forms: those drawing and not drawing on the concept of the time value. Using cluster and correlation analysis, we found these methods are similar to the simple payback period method and are often used alongside this particular method. Therefore, we conclude that the cost comparison and breakeven methods do not reflect time value.
