Capital budgeting is an important task as large sums of money are involved, which influences the profitability of the firm. Depreciation charges are according to capital of return as sale value concepts once fully repaid its applicability in capital budgeting cash ﬂow payment estimates. Assume the manager of the company wanted to live in Houston and intentionally inflated the projected annual cash receipts so that the proposal would be accepted. Managing our way to economic decline.
After that, they make the identification of the investment opportunities keeping in mind the sales target set up by them. They include the Payback Period, Discounted Payment Period, Net Present Value, Proﬁtability Index, Internal Rate of Return, and Modiﬁed Internal Rate of Return. There is no capital rationing.
Circumstances sometimes exist that cause managers to make decisions that are not in the best interest of the company. Payback periods are an integral component of capital budgeting and should always be incorporated when analyzing the value of projected investments and projects. Problems of capital expenditure budgeting. Motivation and management control systems.