CAPITAL BUDGETING

Capital budgeting or what is sometimes referred to as investment appraisal is a management process which involves evaluating of the investments of the company to determine where there are viable or not and thus determine whether to accept the project or reject it all together.

Some of the investment decisions that has to be made by the companies include replacement decisions for the company's fixed assets such as machinery, introduction of new products to the already existing products produced by the company, engaging in long term investments such purchasing shares of other companies among other investment (Ross, Westerfield & Bradford, 2006).