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SYNOPSIS

TOPIC: CAPITAL BUDGETING DECISION

INTRODUCTION:
The term Capital Budgeting refers to the long-term planning for proposed capital outlays or expenditure for the purpose of maximizing return on investments. The capital expenditure may be : (1) Cost of mechanization, automation and replacement. (2) Cost of acquisition of fixed assets. e.g., land, building and machinery etc. (3) Investment on research and development. (4) Cost of development and expansion of existing and new projects.

Capital budgeting is the planning process used to determine whether an organization's long term investments are worth the funding of cash through the firm's capitalization structure. Management must allocate the firm's limited resources between competing opportunities, which is one of the main focuses of capital budgeting.

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