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It deals exactly with major investment proposals, which are essentially long-term projects and incurred among the available market opportunities.
Capital budgeting is the process of making investment decision in capital expenditure. A Capital expenditure may be defined as an expenditure, the benefits of which are expected to be received over a period of time exceeding one year. The main characteristic of a Capital expenditure is that the expenditure is incurred at the one point of time whereas benefits of the expenditure are related at different point of time in future.