Kinds Of Capital Budgeting

Its effects will extend into the future and will have to be endured for a longer period than the consequences of current operating expenditure.

Kinds of capital budgeting.

Capital budgeting decisions have placed greater emphasis due to the following. The increase in revenues can be achieved by expansion of operations by adding a new product line. The process involves analyzing a project s cash inflows and outflows to. A capital budgeting has long term implications.

Capital budgeting decision is a simple process in those firms where fund is not the. The most significant reason for which the capital budgeting decisions is taken is that it has long term implications i e. Toady we will discuss the different types of capital budgeting. Kinds of capital budgeting decisions.

Capital budgeting is used by companies to evaluate major projects and investments such as new plants or equipment. It includes all those projects which compete with each other in a way that acceptance of one precludes the acceptance of other or others thus some technique has to be used for selecting the best among all and eliminates other alternatives. There are two ways to it. 1 accept reject decisions.

Let us make an in depth study of the kinds and planning period of capital budgeting decisions. All the investment decisions which give more return than the cost of capital they are acceptable while the investment decisions which give less return than the cost of capital they are rejected. The crux of capital budgeting is profit maximization.