Kinds Of Capital Budgeting Decisions
Since capital budgeting includes the process of generating evaluating selecting and following up on capital expenditure alternatives allocation of financial resources should be made by the firm to its new investment projects in the most efficient manner.
Kinds of capital budgeting decisions. This objective can be achieved either by increasing the revenues or by reducing costs. All the investment decisions which give more return than the cost of capital they are acceptable while the investment decisions which give less return than the cost of capital they are rejected. 2 mutually exclusive decisions. Capital budgeting decision is a simple process in those firms where fund is not the.
Thus firm will make investment only if the decision is acceptable. Thus capital budgeting decisions can be broadly. Kinds of capital budgeting decisions. These are the decisions which compete with each other which mean the.
1 accept reject decisions. The overall objective of capital budgeting is to maximize the profitability of a firm or the return on investment. Let us make an in depth study of the kinds and planning period of capital budgeting decisions.