Accounting Dictionary

Capital Budgeting

Capital Budgeting involves planning, evaluating, and controlling investments in projects or purchases of fixed assets. It is also called Capital Investment Analysis.

Some methods of capital budgeting include Average Rate of Return, Cash Payback Method, Net Present Value Method, and Internal Rate of Return method. All of these methods help managers decide whether buying a certain project or piece of equipment would be profitable for the company in the long term.

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