Question

What are the steps of Capital Budgeting process?

Answer 1

Solution. The capital budgeting process involves following mentioned process:

1.It starts with organization taking an active part and collecting information on various available potential opportunities from such investment in project.

2.The second step includes determining and calculating costs encircling such process by taking into account the objective of minimizing costs and maximizing profits.

3.Determining and estimating cash flow from such activity in future which facilitates in decision making by showing the amount of worth it will add to the organization after deducting expenses and costs.

4.Estimating and assessment of risks encircling such project which needs active participation by both internal and external management before making implementation decision.

5.The last or final step involves interpretation of report and whether to implement into capital budgeting process on such project or not.