The procedure a company uses to assess potential big projects or investments is called capital budgeting. Before a project is approved or rejected, capital budgeting is necessary. Examples of such projects include the construction of a new plant or a significant investment in a third-party venture.
A business may examine the lifetime cash inflows and outflows of a planned project as part of capital budgeting to ascertain whether the projected returns will satisfy an adequate target benchmark. The practise of capital budgeting is sometimes referred to as investment assessment.
Example of a capital budgeting decision: Whether or not to start a new project that will expand a company's current operations is a common example of a capital budgeting decision. One such choice, for instance, would be to open a new store location.
Capital Budgeting is a part of?(a) Investment Decision(b) Working Capital Management(c) Marketing(d) Capital Structure
Capital Budgeting is a part of investment decisions. The basic objective of capital budgeting is to find projects that will generate cash flows for a company that is greater than the cost of the project.