Capital budgeting, problems and their solution

Hi buddy I want to get some info related to Capital budgeting, problems and their solution so can tell me about it??

[Quick Sam]

As you are asking info about Capital budgeting, problems and its solution, so let me tell you about Capital budgeting firstly which count or come under long term planning for making and finance proposed outlays, in other language Capital budgeting involves choosing projects that add value to the firm, it can involve almost anything from acquiring a lot of land to purchasing a new truck or replacing old machinery .


I have a pdf which having some problems along with solution related to Capital budgeting and that file I am share with you :

Problem
The decision to start your own firm and go into business can be thought of as a
capital budgeting decision. You only go ahead if projected returns look attractive on
a personal and financial basis.@ Discuss this statement.

Solution
The decision to start your own firm and go into business can indeed be thought of as
a capital budgeting decision. You only go for it if projected returns look attractive
on a personal and financial basis. Formally, capital budgeting is described as the
process of planning expenditures that generate cash flows expected to extend beyond
one year. The choice of one year is arbitrary, of course, but it is a convenient cutoff
for distinguishing between classes of expenditures. Examples of capital outlays are
expenditures for land, buildings, equipment and for additions to working capital (e.g.,
inventories and receivables) made necessary by expansion. New advertising
campaigns or research and development programs are also likely to have impacts
beyond one year and come within the classification of capital budgeting expenditures.
Practically speaking, the firm is an investment project, so the decision to go
into business is a decision to fund a capital budgeting project. Both monetary and
nonmonetary benefits are often vital considerations. Nobody can afford to finance a
money-losing operation indefinitely, so self-finance businesses must cover out of
pocket costs and a reasonable rate of return on investment. Still, many entrepreneurs
are attracted by the opportunity to Arun their own show,@ and take some of their
overall pay in the form of nonmonetary benefits, like work schedule flexibility or
personal satisfaction


Capital budgeting, problems and solution




Here is some of the content from attached pdf..........................