Capital Budgeting

Description of Capital Budgeting. Explanation.

Definition Capital Budgeting. Description.

Capital Budgeting is the process of preparing a plan for the raising of capital funds and for their deployment. For an incorporated business, funds may be obtained from a wide variety of sources. Chiefs amongst these are issues of ordinary shares or preference shares and of loan capital.

It is also described as the process of determining which potential long-term projects are worth undertaking such as the purchase of new equipment or the introduction of a new product.

Compare also: Portfolio Analysis

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End of description Capital Budgeting. An explanation.