Question

what is Capital Budgeting? DESCRIBE ALL THE CAPITAL BUDGETING TECHNIQUES?

Answer 1

Capital budgeting means planning for capital assets.

DESCRIBE ALL THE CAPITAL BUDGETING TECHNIQUES-

1-Payback period- It shows that the time period for recovery of initial investment in project.

2-Discounted payback period- In this technique we use discounted cash flow instead of normal cash flow.

3-Internal rate of return- It means discounted cash inflows are equal to the discounted cash outlfows.

4-Average rate of return- It means the average annual yield on the project.

5-Net present value- Present value of inflows deducted from present value of outflows. It means evaluation of project.