Capital Budgeting

CAPITAL BUDGETING
-The planning and control of enceinte expenditures.
-The process in which a business pick ups whether projects such as building a new plant or investing in a long-term venture argon worth pursuing. Oftentimes, a future projects lifetime cash inflows and outflows are assessed in order to determine whether the returns generated meet a sufficient target benchmark. Also know as investment appraisal.
CAPITAL EXPENDITURES
?refers to substantial expenditure of funds the purpose of which is to lower cost and increase moolah income for several years in the future.
CLASSES OF CAPITAL EXPENDITURES
?REPLACEMENT INVESTMENTS
? expansion INVESTMENTS
?PRODUCT-LINE OR NEW MARKET INVESTMENTS
?INVESTMENTS IN SAFETY AND/OR ENVIRONMENT PROJECTS
?STRATEGIC INVESTMENTS
?OTHER INVESTMENT
VALUATION
?is the process of estimating what something is worth. Items that are usually valued are a financial asset or liability.
INVESTMENT
?is made when a firm spends some of its funds for the mental home of a project.




FORMS OF INVESTMENT
?INITIAL INVESTMENT
?LATER INVESTMENT
OBJECTIVES OF CAPITAL BUDGETING
?ESTABLISHING PRIORITIES
?CASH PLANNING
? verbal expression PLANNING
?ELIMINATING DUPLICATION
?REVISING PLANS


CAPITAL BUDGETING SYSTEM
?PREPARATION AND SUBMISSION OF BUDGET
?APPROVAL BUDGET
? quest FOR APPROPRIATION
?SUBMISSION OF PROGRESS REPORTS
?POST APPROVAL REVIEWS
BUDGET REQUESTS
?are those made to include in the corporate budget capital projects which are felt to be desirable by those in the lower organization level.
APPROVAL OF THE BUDGET
?is a process which requires the chase:
?Budget request are forwarded to top oversight.
?Top management decides which projects to recommend to the control panel of directors.
?Top management sends recommendations to the board of directors.
?The board of directors approves or disapproves the recommendations.
?Top management informs projects sponsors of the action...If you want to get a full essay, order it on our website: Orderessay



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