Factors in Capital Budgeting Decision

Factors in Capital Budgeting Decision

There are the following factors will be considered when making this capital budgeting decision;

Project's Cash Flows

The entire project's cash flows based on expectation over the project's life must be considered before making decision regarding the capital budget.

The Rate of Return (ROR)

Before making capital budgetary decision, it is important to determine the risk and return of projects.

The Criteria of Investment

Techniques such as Internal Rate of Return, Present Net Value, and Profitability Index should be implemented to each project's evaluation before selecting the project.

Significance of Factors

These factors in ...