Question

1. Define capital budgeting, explain why it is important, and state how project proposals are generally...

1. Define capital budgeting, explain why it is important, and state how project proposals are generally classified?

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Capital budgeting is a process of determining whether certain long term project are worth investment or not.

It is a process of evaluating potential expenditures that are inclined towards determining whether certain amount to be spent in fixed assets or not.

It is important as it involves Investment for longer periods and it involves huge sum of money and large amount of risk so, it is very important to analyse projects before Investments.

Projects proposal are generally considered using various methods like-

A. Internal rate of return

B. Profitability index

C.Net present value

D. Accounting Rate of return

E. Payback period

These proposals can be classified as

1.Accept Reject decisions- It involves direct acceptance or rejection.

2. Mutually exclusive decision- It involves decisions which are made between alternatives

3. Capital Rationing decision- It is situation where funds are not that much and investment opportunities are many.

Add a comment
Know the answer?
Add Answer to:
1. Define capital budgeting, explain why it is important, and state how project proposals are generally...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT