Introduction The business environment is dramatically changing; investors are more concise and critically evaluate the trends in the market before channeling their cash into any business projects. Seitz and Ellison (1995) explains that, before venturing into business projects, investors need to understand investment appraisal methods or capital budgeting techniques; these are regarded as the standard project evaluating methods that help the investor understand the viability of any project. This paper is aimed at discussing and describing the investment appraisal methods that are essential and most appropriate in evaluating an investment project. Under this paper, we shall look at NPV, IRR, Payback period, and ARR. Discussion Net Present Value Net present value is difference between the present value of cash inflows and the present value of cash outflows. In essence, NPV is the present value of future cash flows minus the purchase price (Arnold, 2007). In capital budgeting NPV is used to analyze the profitability of an investment project. The analysis in this case is tied to the reliability of future cash inflows in relation to an investment project will yield. NPV is calculated using the formula: CF 0 = Cash flow at time zero, CF 1 = Cash flow after one year, K = the opportunity cost of capital and n = number of years NPV is used in investment decision-making as it helps in calculating how much an investment project will return to the investor in a given period. The criterion for accepting an investment is that accepts all projects that have a positive net present value unless they are mutually exclusive or there is capital rationing. Consequently, if the cash flow is a negative value, then the project is in a discounted cash outflow status as at that time (Bowlin and Scott, 1990). Investments with a positive NPV are essentially best ones to invest in (accepted). For example if: NPV > 0 this means that the investment is capable of earning returns to the investor and therefore, the project may be undertaken. In this case, if there is more than one project under consideration, the one with the highest NPV should be given priority. NPV < 0 this means that the project will require the investor to add in more money for the investment to run. This kind of investment projects are unacceptable and hence not worth venturing into them. NPV = 0 this means that the investment will neither gain nor lose value. This kind of projects does not add any monetary value to the investor. Decision on such a project is based on criteria such as strategic positioning. Internal Rate of Return As explained by Gitman (2000), this is the discount rate at which the net present value is zero, it is used in capital budgeting which makes the net present value of all cash flow from an investment project equal to zero. For instance, the higher the internal rate of return, the more profitable the project. In this case, a project with the highest internal rate of return should be undertaken as compared to those with lower IRR. In some cases, IRR is said to be the rate of growth of an investment project is expected to generate. The IRR is given by r in the formula In this case if: K > r; the opportunity cost is greater than the internal rate of return, the investment project should not be undertaken