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Provide clarity on how capital investments are vital for long-term budgeting?

Provide clarity on how capital investments are vital for long-term budgeting?

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Answer #1

Capital Investments are those investments which are made by a business to expand its opertions. This money is used to buy fixed assets or long term assets. Such as real estate, manufacturing plants, and machinery.

Capital Investments are a vital component of long- term budgeting. This is because of the nature of this investment that is long term.

The capital investment made today will result in more cashflow or better results in future that will make a differnece in the company's earning potential in long term. So to ensure that long term budgeting is done corectly we ned to consider what is the cost and what is the potential revenue or profit that will be generated in future because of this investment. This will not only enable a company to have a proper budget but will also ensre that it is prepared for what might happen in future.

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