When comparing NPV with the payback period method, it is clearly that NPV gives a more detailed and complete analysis of a project. However, the payback period method shouldn’t be overlooked, as it is beneficial for its effectiveness and simplicity. But because of it not taking into account so many factors that NPV does, it cannot compare when matched up.
The internal rate of return method is a better and more detailed approach than PBP, but inferior to NPV for any projects that have conventional cash flows at different discount rate for any investment with different investment scale. The IRR is by means no bad measure, but the flaws and shortcomings of it make it as well a weaker approach than the NPV. With the right way of discounting cash flows properly and taking account of all the cash flows, it is safe to say that the superior capital budgeting method is the net present value.