Important Points for IC 89 - Management Accounting Exam
Page 30 Of 54
Go to:
Capital budgeting which is one of the apprising techniques of investment decisions can be defined as " The firms decision to invest its current assets most efficiently and effectively in the long-term projects and activites with the objective of earning good Return on Investment (ROI).
Capital Budgeting has been defined by financial experts in the following terms: It is "Long term planning for making and financing proposed capital outlay" and "Capital budgeting represents the plans for the appropriation and expenditure for fixed assets during the budget period".
Mandatory Investments are required to be made to comply with statutory or regulatory requirements.
The payback period is the length of total time required to recover the initial investment or outlay on the project.
The Net Present Value of a project is the sum of the present values of all the cash flows(both positive and negative) that are expected to arise over the life of the project.
MODELEXAM® 
www.realsoftinfoplan.com