Mba project on capital budgeting kesoram by rajesh sekar. Capital budgeting techniques notes free download as pdf file. A capital expenditure is an outlay of cash for a project that is expected to produce a cash inflow over a period of time exceeding one year. Financial managment and strategy at bellevue university. Capital budgeting or capital expenditure management is concerned with planning and control of capital expenditure. Capital budgeting and various techniques of capital budgeting.
Include investment in working capital as capital expendi ture. Meaning and process, methods of analyze capital budgeting. Assume that machine will be depreciated over 10 years using straightline depreciation. Capital budgeting is the process by which the firm decides which longterm investments to make. The word investment refers to the expenditure which is required to be made in connection with the acquisition and the development of longterm. Capital budgeting is the process of determining which real investment. The basics capital budgeting, lecture notes financial. Access study documents, get answers to your study questions, and connect with real tutors for mba 655. Mba project on capital budgeting kesoram this is a research report on mba project on capital budgeting kesoram uploaded by rajesh sekar in category. Cash flows project life discounting factor the effectiveness of the decision rule depends on how these three factors have been. All documents finance retail banking section of our research repository.
Com pdf download finance is always a life blood of every enterprise. Capital budgeting techniques notes capital budgeting net. Various techniques of capital budgeting i payback period it is the time required to recover the initial investment capital invested in a project. Total cash inflow merits it is easy to calculate and simple to understand. F irst, capital budgeting is very important for corporations. Capital budgeting decision means the decision as to whether or not to invest in longterm projects such as setting up of a factory or installing a machinery or creating additional capacities to manufacture a part which at present may be purchased from outside and so on. Finance is not just related to managing the finance, but it is also related to anticipation, procurement and allocation of finance whenever required.
Capital budgeting is used to make the investment decision. Capital budgeting, steps to capital budgeting, difference between independent and mutually exclusive projects, net present value npv. However, the decision rule itself considers following inputs. The benefits are the expected cash inflows from the project, which are discounted against a standard, generally the cost of capital. It is a nondiscounted cash flow method of capital budgeting. Capital budgeting is the pr ocess that companies use for decision making on capital projects projects with a life of a year or more.
Include opportunity costs of using existing facilities. Lecture notes, lectures 12 ch12 the capital budgeting decision. For mutually exclusive projects, take the one with positive and highest npv. Capital expenditure budget or capital budgeting is a process of making decisions regarding investments in fixed assets which are not meant for sale such as land, building, machinery or furniture.
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