Pavithra.K

ABSTRACT

Introduction to the Study Capital budgeting can be used to analyze a wide variety of investments in capital assets. The investment decision is to allocate a limited amount of funds among a variety of potential investments. Because there is not enough money to fund all of the investments, a decision is required to determine which investments to fund. Many formal methods are used in capital budgeting, including the techniques such as ? Payback period method ? Accounting rate of return method ? Net present value method ? Internal rate of return method ? Profitability index method These methods use the incremental cash flows from each potential investment, or project techniques based on accounting earnings and accounting rules are sometimes used, though economists consider this to be improper.