Capital Budgeting Its Introduction and Management Functions

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Capital Budgeting: Its Introduction and Management Functions (Management)

Capital Budgeting

  • Capital budgeting is used to determine the long term investments.
  • These long term investments includes new machinery, replacement of machinery, new plants, new products and research development.
  • Here in capital budgeting - analyzing a project՚s cash inflows and outflows - to determine the expected return meets a set benchmark.
  • The major methods of capital budgeting - discounted cash flow and payback analyses.
Capital Budgeting
Capital Budgeting
  • Capital budgeting is a process of evaluating investments and huge expenses in the organization in order to obtain the best outcome or returns on investment.
  • Capital budgeting is an important function of management where right decisions taken can lead the business to great extent and also a single wrong decision can make the business even to shut down.

Mcq՚S

1. Which of the following is a process of evaluating investments and huge expenses in the organization?

a. Capital budgeting

b. Capital management

c. Capital analysis

d. All the above

Answer: A

2. capital budgeting focus on

a. Analyzing a project՚s cash inflows and outflows

b. Analyzing only the expenses of the organization

c. Analyzing focuses only on profit

d. Analyzing the past financial transaction of the business

Answer: A

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