Mataracy
VIP Contributor
Capital budgeting is the planning and control of capital expenditures and is concerned with how a company, individuals, firms and government will decide on whether to,when to and how to spend money on long- tern project. In other word it may be described as management decision on long-term asset or the investment decision exceeding one accounting year. Capital budgeting decision will involve the following areas.
(1) identification of the various investment option or investment portfolio.
(2) which capital project Jr investment should we adopt?
(3) identification of the relevant cash flow s associated with each of the investment portfolios
(4) what combination of various capital projects should we under take and how should finance be raised for them?.
(5) what size of capital expenditure should we incur and for what period if time.
.(6) Project monitoring and post-project audit.
Capital investments are integral part of a company's long planning and capital budgeting which involves current cash outlay in the anticipation of future stream if benefits where a significant period of time is expected to elapse between the outlay of cash and the receipt of the benefits.
Capital investment decision can take place in business firms,public sector, and at individual levels .Business firms decisions will embrace investments in new product , in plant and machinery,advertisement ,landed properties etc. In the public sector capital investment decision may be on exploration for iron- ore ,training of workers in new technology. Constricted of new roads,schools and airports etc. While individual capital projects will include purchase or house,consumer durable goods etc
(1) identification of the various investment option or investment portfolio.
(2) which capital project Jr investment should we adopt?
(3) identification of the relevant cash flow s associated with each of the investment portfolios
(4) what combination of various capital projects should we under take and how should finance be raised for them?.
(5) what size of capital expenditure should we incur and for what period if time.
.(6) Project monitoring and post-project audit.
Capital investments are integral part of a company's long planning and capital budgeting which involves current cash outlay in the anticipation of future stream if benefits where a significant period of time is expected to elapse between the outlay of cash and the receipt of the benefits.
Capital investment decision can take place in business firms,public sector, and at individual levels .Business firms decisions will embrace investments in new product , in plant and machinery,advertisement ,landed properties etc. In the public sector capital investment decision may be on exploration for iron- ore ,training of workers in new technology. Constricted of new roads,schools and airports etc. While individual capital projects will include purchase or house,consumer durable goods etc