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Why is the initial investment treated as a time-zero cash outflow? What are the advantages and disadvantages of the payback method? What is a hurdle rate? What is the difference between mutually exclusive and independent projects? What is the time value of money and why does it matter in capital budgeting? What is Net Present Value (NPV) and how do you interpret it? What is the Internal Rate of Return (IRR)? What is the discounted payback period? What cash flows are relevant in capital budgeting? What is capital rationing?
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What is the difference between a screening and a preference decision?

Beginner

Answer

A screening decision determines whether a project meets a minimum acceptance standard (e.g., positive NPV, IRR above hurdle). A preference (ranking) decision chooses among several acceptable projects competing for limited funds. Screening filters; preference ranks the survivors.
Real-world example Projects first pass a positive-NPV screen, then compete for limited funds in a ranking decision.

Common follow-ups: What does screening decide? | When is a preference decision needed?

Capital Budgeting The Budgeting Process Capital Budgeting
All 34 Capital Budgeting questions