INTRODUCTION
Capital budgeting is the planning of long-term corporate financial projects relating to investments funded through and affecting the firm's capital structure. Management must allocate the firm's limited resources between competing opportunities (projects), which is one of the main focuses of capital budgeting.
Secondly, Capital budgeting is also concerned with the setting of criteria about which projects should receive investment funding to increase the value of the firm, and whether to finance that investment with equity or debt capital. Investments should be made on the basis of value-added to the future of the corporation. Capital budgeting projects may include a wide variety of different types of investments, including but not limited to, expansion policies, or mergers and acquisitions. When no such value can be added through the capital budgeting process and excess cash surplus exists and is not needed, then management is expected to pay out some or all of those surplus earnings in the form of cash dividends or to repurchase the company's stock through a share buyback program.
Choosing between capital budgeting projects may be based upon several inter-related criteria.
(1) Corporate management seeks to maximize the value of the firm by investing in projects which yield a positive net present value when valued using an appropriate discount rate in consideration of risk.
(2) These projects must also be financed appropriately.
(3) If no positive NPV projects exist and excess cash surplus is not needed to the firm, then financial theory suggests that management should return some or all of the excess cash to shareholders (i.e., distribution via dividends).
TABLE OF CONTENTS
Cover Page i
Title Page ii
Acknowledgement iii
Table of Contents iv
CHAPTER ONE
- Capital Budgeting Definition 1
- Features and Significance of Capital Budgeting 3
- Characteristics of Capital Budgeting 5
CHAPTER TWO
- The Importance of Capital Budgeting 12
- Problems and Difficulties in capital Budgeting 17
CHAPTER THREE
- Analysis of Risk in Capital Budgeting 19
- Method of Measuring Risk and Illustrations 20
CHAPTER FOUR
- Capital Budgeting Process 31
- Types of Capital Budgeting Decisions 35
- Capital Investment Process 36
References
CHAPTER ONE
- Capital Rationing 40
- Types of Capital Rationing 43
CHAPTER TWO
- Capital Rationing Decisions 44
- Factors leading to Capital Rationing 45
References
Disclaimer: Note this academic material is intended as a guide for your academic research work. Do not copy word for word. Note: For Computer or Programming related works, some works might not contain source codes
CITE THIS WORK
(2014, 09). Capital Budgeting.. ProjectStoc.com. Retrieved 09, 2014, from https://projectstoc.com/read/3334/capital-budgeting-9927
"Capital Budgeting." ProjectStoc.com. 09 2014. 2014. 09 2014 <https://projectstoc.com/read/3334/capital-budgeting-9927>.
"Capital Budgeting.." ProjectStoc.com. ProjectStoc.com, 09 2014. Web. 09 2014. <https://projectstoc.com/read/3334/capital-budgeting-9927>.
"Capital Budgeting.." ProjectStoc.com. 09, 2014. Accessed 09, 2014. https://projectstoc.com/read/3334/capital-budgeting-9927.
- Related Works
- Effective Administration Of Credit In Co-operative Enterprise (a Case Study Of Selected Co-oeratives In Enugu South L.g.a Of Enugu State
- How To Organise A Viable Co-operative Society In Nigeria (a Case Study Of Ministry Of Commerce, Industry And Technology Co-operative Department, Enugu
- Role Of Government In Co-operative Development
- Enhancing The Performance Of Co-operative Societies Through The Application Of Ica Co-operative Principles (a Case Study Of Selected Societies In Enugu South Local Government Area Of Enugu State)
- Reducing Rural Unemployment Through Co-operative Movement (a Case Study Of Agbani Community)
- The Potentials For A Co-operative Thrift Credit Society In A Higher Education Institution (a Case Study Of I.m.t, Enugu)
- The Role Of Cooperative Societies In Reducing Unemployment (a Case Study Of Selected Cooperative Societies In Aba North Local Government Area)
- The Role Of Nardb In The Financing Of Agricultural Co-operatives Soicety In Ngeria (a Case Study Of Nardb Enugu)
- Impact Of Agricultural Marketing Cooperative On Sales Promotion (a Study Of National Archives Multipurpose Cooperative Society Ltd)
- The Role Of Nardb In The Financing Of Agricultural Co-operatives Soicety In Ngeria (a Case Study Of Nardb Enugu)