Pls explain in detailll

Dear student,

Such questions are made for enhancing the self-creative skills and should be tried answering on your own. However, here are a few points that will help you in framing your answer:
1) Start with the meaning of capital budgeting decision.
Capital budgeting decision is a very essential decision which needs to be taken carefully. It has the capability of changing the financial fortunes of a business. Capital budgeting decision refers to the decisions regarding the allocation of fixed capital to different projects. Such decisions involve investment decisions regarding the attainment of new assets, expansion, modernization, and replacement. Such long term investments include purchasing plant and machinery, furniture, land, building, etc. and also expenditure as on the launch of a new product, modernization, and advertising, etc. They have long term implications on the business and are irrevocable except at a huge cost. They affect a business’s long term growth, profitability, and risk.
2)  A list of capital budgeting techniques is given below. 
1. Payback Period 
2. Profitability Index (PI)
3. Net Present Value (NPV) 
4.  Internal Rate of Return (IRR)
5. ​Accounting Rate of Return (ARR)
Choose any 2 techniques of your choice and think about how they can benefit your company. 
​​​​​​You may feel free to contact us if you face any issue or difficulty while composing your answer. You can also send us your answers here for feedback and required corrections if any.


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