What is Capital Budgeting?
Capital budgeting (or investment appraisal) is the planning process used to determine whether an organization's long term investmentssuch as new machinery, replacement machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structure (debt, equity or retained earnings). It is the process of allocating resources for major such or investment, expenditures. One of the primary goals of capital budgeting investments is to increase the value of the firm to the shareholders.
Many formal methods are used in capital budgeting, including the techniques such as
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