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 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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✍ Manishika