The Importance and Extent of Using Discounted Cash Flow Techniques For Capital Investment Decision MakingField Study on Palestinian Listed Corporations

Abstract

This study aims at investigating the importance and extent of using discounted cash flow techniques for capital investment decision-making in Palestinian listed corporations. It has been performed on all corporations listed at Palestine Stock Exchange totaling thirty six corporations as on March 31, 2008. Thirty five questionnaires were distributed to the listed corporations; all of them were received representing a response rate of 100%. Statistical Package for Social Sciences (SPSS) has been used in analyzing data, using descriptive statistics such as frequencies and percentages. Results show that there is a gap between theory and practice. It also shows that the capital investment decision-makers prefer the use of payback period, accounting rate of return and profit index techniques, while the finance theory prefer using net present value, and internal rate of return techniques.