Question

What are some expenses that have impacted institutions' capital budget today that did not 10 to 15 years ago and what are some typical expenses associated with the captial budget?

Answer 1

Capital budgeting is the process in which business determinants and evaluate potential expenses or investments that I lodge a nature these expenditures and Investments include project such as a building a new plant or investing in long term the business evaluates the potential expenses or Investments that are large images often times a prospective projects lifetime cash inflows and outflows are assessed in order to determine whether the potential returns generated meet a sufficient target benchmark also known as investment appraisal capital budgeting is necessary because all the projects and better opportunities that enhance the shareholder value because the amount of capital available at any given time for new project is limited management to use capital budgeting techniques determine which project Vinay almost return at applicable period of time. Some expenses that have impacted Institutions capital budget today our money spent to reduce working expenses it can be clearly explained conversion of handwritten machinery to power driven machinery is a necessary expense of institution in today's world and it did not affect them expense 15 years ago other expenses that form a part of capital budget include various computer and technology changes that have taken over the years internet connections laptop and desktops hi tech softwares and purchase of intangible assets of softwares the IT expenses on you that is impacted the capital budget. So there are some typical expenses associated with capital budgeting expenses incurred on issuing shares and debentures as the benefit of these expenses will be available in future years also expenses incurred on raising loans for the business the long-term necessary expenses which affect the capital budget are the construction of the building there in a new business purchase of necessary cash machines and assets expenditure in connection with the purchase of erection of fixed assets purchase wages paid for erecting machinery Cottage paid on acquiring plant and machinery overhauling of second hand machines expenses which results in extension of improvement of fixed assets and increase the earning capacity of such assets hence capital budgeting and investment appraisal is a planning process to determine whether organisations long term investments such as machine replacement of machine new plants new product research and development product and projects are worth the funding of cash through the firm's capitalisation structure