Capital budgeting is the financial tool to identify and evaluate any financial projects which requires capital investment. This is same as the budget which deals with the cash inflow, cash outflow and the profit or loss at the end from any specific financial project undertaken. Capital budget also helps to identify the long term benefit of the capital investment and the return of investment.
Why do we need capital budgeting?
Correct capital budgeting is very much important for a company as it helps the management