Capital Budgeting

Accounting term - SlickAccount
Capital Budgeting – SlickAccount

Capital Budgeting is a process which analyzes the frequency of return on long-term & short-term investments to be made by a business. Capital Budgeting is same as Investment appraisal.

Capital Budgeting is an important & complex task as the analysis needs to be accurate to determine the return value of investments.

There are methods to perform capital budgeting. Methods are:

  • Net present value method
  • Accounting rate of return method
  • Internal rate of return method
  • Payback period method

Net present value method: Net present value method is a commonly used method in capital budgeting also it’s the most accurate method amongst other methods being used for capital budgeting.

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