ECONOMICS

Detailed explanation-1: -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-2: -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-3: -Capital budgeting is vital in marketing decisions. Decisions on investment, which take time to mature, have to be based on the returns which that investment will make. Unless the project is for social reasons only, if the investment is unprofitable in the long run, it is unwise to invest in it now.