Introduction of Capital Budgeting

In the introduction part of capital budgeting, we can explain it as that decisions which are taken for buying long term and fixed assets. Working capital decisions and current assets investment decision do not come under capital budgeting. When we take the decision whether particular fixed asset should be purchased or not, its planning will be capital budgeting. In capital budgeting, we fix our total investment in best project which will provide us higher return. For capital budgeting, we use different techniques for evaluating different projects. All techniques are called capital budgeting techniques.

Capital budgeting uses in all the area like construction business, defense and other large scale business because without capital budgeting, our investment will not give better return and we may get risk of loss of return.

Related : NPV