Meaning
This critical financial process helps businesses make informed investment decisions concerning significant expenditures.Definition
Capital Budgeting is the process companies use to evaluate potential large investments or projects, such as new machinery, facilities, or acquisitions. It assesses their long-term financial viability.Key Techniques
Common methods include Payback Period, Net Present Value (NPV), Internal Rate of Return (IRR), and Profitability Index.Importance
It ensures optimal allocation of scarce capital, minimizes risks, and maximizes shareholder wealth by selecting projects with the highest potential returns.Author
