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 Capital Budgeting is the process of

making investment decision in fixed


assets or capital expenditure. Capital
Budgeting is also known as investment,
decision making, planning of capital
acquisition, planning and analysis of
capital expenditure etc.
 Capital budgeting evaluates the investment
decisions related to assets. The "capital" in
capital budgeting refers to the investment
of resources in assets, while the budgeting
refers to the analysis and assessment of
cash inflows and outflows related to the
proposed capital investment over a
specified period of time. Objectives of
capital budgeting is to (1) determine
whether or not a proposed capital
investment will be a profitable one over the
specified time period, and, (2) to select
between investment alternatives.
 Determine whether or not a proposed
capital investment will be a profitable one
over the specified time period.
 To select among investment alternatives
 Capital budgeting at the international level
addresses the issues related to exchange
rate fluctuations, capital market
segmentation, international financing
arrangements, international taxation,
country risk or political risk.
 POLITICAL RISK
 CURRENCY VOLATALITY
 CONVERSION OF CURRENCY
 TAXATION
 MARKET DEMAND
 EXCHANGE RATE RISK
 LARGE MARKET
 SUBSIDY
 LOWER TAXATION
 ROYALTY
 ASSESSABILITY TO RAW MATERIALS
 LOWER COST