Process of capital budgeting

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PROCESS OF CAPITAL

• BUDGETING

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Identifying and generating projects
Capital budgeting starts with investment
proposals. There are various motivations for
making an investment in a business. A product
line might be increased in scope or widened.
Alternate suggestions include raising output or
lowering production costs.
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Evaluating the project
It primarily consists of selecting all the
criteria necessary for determining the need for
a proposal. To maximise marketing value it must
correspond to the companys mission. It is
critical to consider the time value of money here.
4
Selecting a project
After the project has been completed, the
remaining components must be addressed. These
include the acquisition of funds, which the
companys finance department can investigate.
Before concluding and approving the project, the
companies must consider all options.
5
Implementation

• Once the project has been implemented, other
  critical elements such as completion within the
  time frame specified or cost reduction must be
  addressed. Following that, management is in
  charge of monitoring the projects impact.

6
Performance Review
This entails analyzing and comparing actual
results to predicted outcomes. This step assists
management in identifying and eliminating flaws
in future proposals.
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