Kinds Of Capital Budgeting Decisions

2 mutually exclusive decisions.

Kinds of capital budgeting decisions.

This objective can be achieved either by increasing the revenues or by reducing costs. These are the decisions which compete with each other which mean the. Let us make an in depth study of the kinds and planning period of capital budgeting decisions. Capital budgeting decision is a simple process in those firms where fund is not the.

It includes all those projects which compete with each other in a way that acceptance of one precludes the acceptance of other or others thus some technique has to be used for selecting the best among all and eliminates other alternatives. 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. Read this article to learn about the three important kinds of capital budgeting decisions. Thus capital budgeting decisions can be broadly.

Capital budgeting primarily refers to the decision making process related to investment in long term projects an example of which includes the capital budgeting process conducted by an organization in order to decide that whether to continue with the existing machinery or buy a new one in place of the old machinery. Thus firm will make investment only if the decision is acceptable. The overall objective of capital budgeting is to maximize the profitability of a firm or the return on investment.