GENERAL KNOWLEDGE

Detailed explanation-1: -Capital Budgeting is defined as the process by which a business determines which fixed asset purchases or project investments are acceptable and which are not. Using this approach, each proposed investment is given a quantitative analysis, allowing rational judgment to be made by the business owners.

Detailed explanation-2: -Capital budgeting involves the valuation of a company’s lifetime cash inflows and outflows from a project to determine whether the decisions of investing in that project are feasible or not. On the other hand, the process of capital planning tells you where the money for capital projects comes from.

Detailed explanation-3: -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-4: -Capital budgeting is a process of evaluating investments and huge expenses in order to obtain the best returns on investment. An organization is often faced with the challenges of selecting between two projects/investments or the buy vs replace decision.