Capital Budgeting, Risk, Capital Expenditure


Finance is the life blood of business. Finance is said to be the circulatory system of the economy body, making possible the required cooperation between the innumerable units of activity. Finance guides and regulates investment decisions and expenditure of administers economic activities. Capital budgeting means planning for capital assets. Capital budgeting decisions are complex process of paramount importance in financial decisions, because efficient allocation of capital resources is one of the most crucial decisions of financial management. Capital budgeting is budgeting for capital projects.Because the long-term profitability of most enterprises depends on the nature and quality of their capital project investments, appropriate planning, evaluation, and implementation of high-return capital projects are imperative. Capital budgeting helps managers plan for the acquisition of capital projects that promise high returns. It is a managerial technique of meeting capital expenditure with the overall objectives of the firm. The research findings are expected to be useful to the financial institutions, managers as well as practitioners in the area of investment decision-making. As there are various methods and criteria available, the research studies undertaken so far suggest that by and large decision-makers tend to select methods ignoring time value of money.