A Budget is made for the long term capital investment of capital expenditure. the process of preparing capital budget is known as capital budgeting. capital budgeting is related with designing and carrying out through a systematic investment programme. at last we can say that capital budgeting is the process of making investment decision in fixed assets of capital expenditure. The capital budgeting consist the following
- The search for most profitable investment proposals
- investing the proposals
- to find out the effect of accepting and proposals
- making analysis of profitability of each and every project at each stage.
- project execution
according to Philippatos :- capital budgeting is concerned with the allocation of the firm scores financial resources among the available market opportunities. the consideration of investment opportunity involve the comparison of expected future. streams of earning from a project, with the immediate and subsequent extreme of Expenditure for it.
according to R.M.Lynch :-capital budgeting consistent planning for development of available capital for the purpose of maximizing the long-term profitability of the firm.
scope of capital budgeting
- large investment
- capital budget
- capital expenditure
- employed in capital
- heavy investment
process of capital budgeting
- project generation
- project evaluation
- project selection
- project execution
method of capital budgeting
- degree of urgency
- Unadjustment return on investment
- payback period method
- present value method
- internal rate of return method
- net present value method
