Investment Decisions Related To The Allocation Of Capital

Abstract

Capital budgeting is a methodical procedure for assessing and distributing funds for capital investments. These expenses usually entail the acquisition of new equipment, the establishment of new manufacturing lines, and the enhancement of production capacities. Therefore, capital budgeting decisions play a critical role in determining the long-term sustainability of the organisation. When a company has limited capital and faces multiple investment opportunities, this becomes especially crucial. The manager's ability to allocate limited financial resources in a manner that maximises profits will determine the company's long-term profitability. The extended duration of most investment possibilities and the inherent uncertainty and challenge in forecasting the future heighten the complexity of the selection process.