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    This document provides an introduction to capital budgeting. It defines capital budgeting as decision making involving long-term investment projects that span multiple years. The objectives, importance, features, and methods of capital budgeting are discussed. Capital budgeting is used to evaluate major projects and investments through analyzing cash inflows and outflows. It allows companies to set priorities and make least-cost decisions involving large investments and long-term profitability impacts. Common methods include internal rate of return, net present value, profitability index, and payback period. Careful capital budgeting is important as right decisions can significantly grow a business while wrong choices may threaten its survival.

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    42-Shubham Hanbar-sybaf a(Business Economics 2)

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    This document provides an introduction to capital budgeting. It defines capital budgeting as decision making involving long-term investment projects that span multiple years. The objectives, importance, features, and methods of capital budgeting are discussed. Capital budgeting is used to evaluate major projects and investments through analyzing cash inflows and outflows. It allows companies to set priorities and make least-cost decisions involving large investments and long-term profitability impacts. Common methods include internal rate of return, net present value, profitability index, and payback period. Careful capital budgeting is important as right decisions can significantly grow a business while wrong choices may threaten its survival.

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    11 views11 pages

    42-Shubham Hanbar-Sybaf A (Business Economics 2)

    Uploaded by

    shubham hanbar
    This document provides an introduction to capital budgeting. It defines capital budgeting as decision making involving long-term investment projects that span multiple years. The objectives, importance, features, and methods of capital budgeting are discussed. Capital budgeting is used to evaluate major projects and investments through analyzing cash inflows and outflows. It allows companies to set priorities and make least-cost decisions involving large investments and long-term profitability impacts. Common methods include internal rate of return, net present value, profitability index, and payback period. Careful capital budgeting is important as right decisions can significantly grow a business while wrong choices may threaten its survival.

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    of 11

    WELCOME

    TOPIC – CAPITAL BUDGETING

    A project submitted to
    University Of Mumbai for partial completion of the
    degree of
    Bachelor of Commerce (Accounting and Finance)
    Under the faculty of Commerce
    By
    Hanbar Shubham Anandrao
    Under the Guidance of
    Prof. Shweta Ghule mam
    Changu kana Thakur Art’s, Commerce and Science
    College, Sector- 11, New Panvel
    CONTENTS
     Introduction

     Definition

     Objectives

     Importance of capital budgeting

     Features of capital budgeting

     Methods of capital budgeting

     Types of capital budgeting

     Conclusion
    INTRODUCTION

    • Capital budgeting is used by companies to evaluate major projects and


    investments, such as new plants or equipment.

    • The process involves analyzing a project’s cash inflows and outflows to


    determine whether the expected return meets a set benchmark.

    • The major methods of capital budgeting include discounted cash flow,


    payback, and throughput analyses.
    DEFINITION

    “Capital budgeting(also known as investment decision making) is the decision

    where investment of money and expected benefits arising there from are spread over

    more than one year, it includes both raising of long-term funds and as well as their

    utilization.
    OBJECTIVES
    1. Setting priorities.

    2. Purchasing assets for positive use.

    3. Least-cost objectives.

    4. Keeping debt in line.

    5. Determine product scope.


    IMPORTANCE OF CAPITAL
    BUDGETING
    1. Long-term Implications of Capital Budgeting

    2. Involvement of large amount of funds in Capital Budgeting

    3. Large and Heavy Investment

    4. Long term Effect on Profitability

    5. National Importance
    FEATURES
    1. Large Investments

    2. High Risk

    3. Long Term Effect On Profitability

    4. Difficult Decisions
    METHODS OF CAPITAL
    BUDGETING

    1. Internal Rate of Return

    2. Net present value

    3. Profitability index

    4. Accounting rate of return

    5. Payback period
    CONCLUSION
    1. Capital budgeting is the process by which investors determine the value
    of a potential investment project.

    2. Right decisions taken can lead the business to great heights.

    3. A single wrong decision can inch the business closer to shut down due
    to the number of funds involved and the tenure of these projects
    REFERENCE
    1. https://en.wikipedia.org/wiki/Capital_budgeting

    2. https://www.slideshare.net/Stonevinayak/capital-budgeting-54777962

    3. https://accountlearning.com/factors-influencing-capital-expenditure-decisio
    ns/

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