Introduction to Capital Budgeting

What you’ll learn to do:┬áDiscuss capital budgeting

A car on the processing line.

Capital budgeting is used to describe how managers may deal with huge buying decisions, such as new equipment, new product lines or a new manufacturing facility. Since there might be quite a few options, it is important to evaluate each to determine the most efficient and effective path for a company to choose.

How well a manager can make these kinds of decisions will have a big impact on the financial health, long term, of the organization. We will discuss each of the methods that can be used to evaluate these kinds of decisions.