Right decisions taken can lead the business to great heights. However, a single wrong decision can lead to huge lose. Capital budgeting is a predominant function of management. It is a process of evaluating investments and huge expenses in order to obtain the best returns on investment. An organization is often faced with the challenges of selecting between two projects or investment decisions. Capital expenditures are huge and have a long-term effect. Therefore, while performing a capital budgeting analysis an organization must be cautious. Selecting the most profitable investment is the main objective of capital budgeting. However, controlling capital costs is also an important objective. Determining the quantum of funds and the sources for procuring them is another important objective of capital budgeting. Thus, capital budget is the most important responsibility undertaken by an organization before selecting and investing on a project.

Saket Kumar

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