The objective of this article is to review and critique the criteria for evaluating projected cash flows that are frequently advocated as appropriate tools for managers to use in making investment decisions. Net present value and the internal rate of return are of unproven worth as criteria of investment value under the conditions normally faced by decision makers. Moreover, both lack characteristics desirable in a measure of financial worth that would be useful to most managers. A new criterion, analogous to the coupon rate on a bond, or the annual return on a non-wasting asset, is proposed as a capital-budgeting criterion which is much more useful to corporate decision makers. The article will first review the simple financial model that underlies what might be considered the conventional wisdom on capital budgeting. In the following section I will describe the circumstances under which decision makers make investment de-