Capital budgeting is the process of expenditures planning whose cash flow is expected to reach beyond the year. In other ways, it’s a process that requires planning for the establishment of the budgets of the projects that have long-term consequences. It can be used for processes such as purchasing new equipment or launching a new product on the market. Companies prefer to intricately study a project before moving ahead, as on the company's financial performance it has a great impact. A successful business depends on capital budgeting decisions which are taken by management. The company management must analyze several factors before taking on a big project. First, management must always bear in their mind that capital expenditures need large outlays of funds. Second, companies should find ways to determine how best to raise and return the funds. The management must also take into account that the capital budget requires a long term commitment. The demand for the analysis of cap...
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