Capital budgeting is a tool used in business to determine the financial viability of a potential project. Net present value, internal rate of return, payback, discounted payback, and modified rate of return are some of the calculations used once businesses have a reliable cash flow budget for their project.
In this assignment, you will demonstrate your understanding of the necessary aspects of capital budgeting.
Respond to the following:
- What is capital budgeting and why is it important to business decisions?
- Discuss how the information should be organized in a capital budgeting process, and who will use the information for decision-making.
- What could go wrong with the capital budgeting process?
- Provide an example of a capital budgeting process from an online source and explain the salient points of this example to the class.