ECONOMICS

Detailed explanation-1: -Capital budgeting is a method of estimating the nancial viability of a capital investment over the life of the investment. Unlike some other types of investment analysis, capital budgeting focuses on cash ows rather than prots.

Detailed explanation-2: -Capital Budgeting is the process of making financial decisions regarding investing in long-term assets for a business. It involves conducting a thorough evaluation of risks and returns before approving or rejecting a prospective investment decision. This process is also known as investment appraisal.

Detailed explanation-3: -Capital budgeting is the process a business undertakes to evaluate potential major projects or investments. Construction of a new plant or a big investment in an outside venture are examples of projects that would require capital budgeting before they are approved or rejected.

Detailed explanation-4: -Capital budgeting in businesses focuses on the essential fixed assets a business should purchase and the least necessary assets to buy. Whereas, capital investment decision refers to the assessments made before the purchase of an asset by the management, to conclude on the methods and ways of spending capital assets.

Detailed explanation-5: -Capital budgeting decision may be defined as the firm’s decision to invest its funds in the long term assets in anticipation of an expected flow of benefits over a number of years. It involves a current outlay or series of outlays of cash resources in return for an anticipated flow of future benefits.