A sound capital budgeting technique is based on

2020-02-26 17:55

Jun 12, 2019  The investment decision rules may be referred to as capital budgeting techniques, or investment criteria. A sound appraisal technique should be used to measure the economic worth of an investment project. The essential property of a sound technique is that it should maximize the shareholders wealth. The following other characteristics should also be possessed by a sound investment evaluation criterion.A sound Capital Budgeting technique is based on: Cash Flows; Accounting Profit; Interest Rate on Borrowings; Last Dividend Paid; Which of the following is not a relevant cost in Capital Budgeting? Sunk Cost; Opportunity Cost; Allocated Overheads; Both (a) and (c) above; Capital Budgeting Decisions are based on: Incremental Profit; Incremental a sound capital budgeting technique is based on

Jun 26, 2019 Capital Budgeting. Loading the player Capital budgeting is the process in which a business determines and evaluates potential expenses or investments that are large in nature. These expenditures and investments include projects such as building a new plant or investing in a longterm venture.

Capital budgeting revolves around capital expenditures which include large inflow and outflow of money to finance investment projects. It is a process by which a company decides whether it should invest in a project or not. We should understand the advantages and disadvantages of capital budgeting as a technique to have a correct interpretation of results thereof. The net present value (NPV) technique is the most theoretically sound and widely used capital budgeting technique. The NPV compares the present value of the projects cash flows with the present value of the projects costs.a sound capital budgeting technique is based on ADVERTISEMENTS: Some of the major techniques used in capital budgeting are as follows: 1. Payback period 2. Accounting Rate of Return method 3. Net present value method 4. Internal Rate of Return Method 5. Profitability index. 1. Payback period: The payback (or payout) period is one of the most popular and widely recognized traditional methods [