discuss the various methods adopted for a capital budgeting decision.
NPV(net present value)
Payback period
ARR
IRR
explain the method of capital budgeting?
Capital budgeting techniques in Indian industries include researching long term investment decisions and making business decisions based on predictions. Evaluations are made and changes can be implemented if an Indian industries need them. .
capital budgeting decisions
capital budgeting decisions capital structure decisions
why capital budgeting decisions are very crucial
Capital budgeting is related with the investments decisions which has to be made in long-term fixed assets and working capital management. Capital structure is related with the financing decisions regarding the debt and equity combinations,in which proportion debt and equity has to be maintained.
The dividend decision is made jointly with the capital structure and capital budgeting decisions because all three decisions are interconnected and have an impact on the overall financial position of the company. The dividend decision determines how much of the company's earnings are distributed to shareholders, which in turn affects the company's ability to finance its capital structure and fund capital budgeting projects. By considering all three decisions together, companies can ensure a balanced approach that aligns with their overall financial goals and objectives.
cash outflows only
Capital budgeting is related with the investments decisions which has to be made in long-term fixed assets and working capital management. Capital structure is related with the financing decisions regarding the debt and equity combinations,in which proportion debt and equity has to be maintained.
Capital budgeting entails decisions to commit present funds in long term investment in anticipation of future returns. The future is usually of long term nature spanning over five years. The amount of investment and the returns from the cannot be predicted with certainty due to certain variables like market for the product, technology, government policies, etc. The uncertainty associated with the investment and the returns is what makes decision makers to consider probabilty distributions in their estimates, hence, making capital budgeting to be considered under uncertainty and risk.
Yes it is the different names which are used interchangibally for the same process name.
Incremental Cash flows are included in capital budgeting decision and if capital budgeting decisions require acquisition of money from open market then its financial cost is also relevant for decision making and it is also included in it.
The three types of financial management decisions include capital structure, capital budgeting and working capital. They are designed to answer the main source of capital used to run the firm.