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Capital Budgeting

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Capital budgeting is the process of determining whether an organization’s long term investments such as new machinery, new product line, new building and research development projects are worth the funding of cash through the firm’s capital structure (equity, debt, or retained earnings).It is also known as “investment appraisal.” It is the process in which resources are allocated for capital, investment or expenditure.The mail aim of Capital Budgeting is to maximise shareholders’ wealth.Need for Capital Budgeting A large sum of…