I. M. Pandey defines capital budgeting decision as, "the firm's decision to invest its current funds most efficiently in the long term assets, in anticipation of an expected flow of benefits over a series of years". Capital budgeting decisions may either be in the form of increased revenues, or reduction in costs. Capital expenditure decisions therefore include, addition, disposition, modification [...]
1. Introduction to Capital Budgeting Every business entity has to continuously incur expenses on certain resources or assets which help it not only to produce but also grow. This expenditure has to be made on raw materials, labour, fuel and power, spares and stores as well as certain essential maintenance expenses. These expenses are the routine and recurring expenses which [...]
1. Introduction to Cost of Capital The various sources from which the long term requirement of the capital can be met. Each of these sources involves some cost. The cost of capital can be defined as '"the rate of which an organization must pay to the suppliers of capital for the use of their funds". In economic term, the cost [...]