This Chapter is devoted to a discussion of the principles and techniques of capital budgeting. Section 1 discusses the nature of capital budgeting in terms of meaning, importance, difficulties, rationale and types. The identification of relevant data for capital budgeting decisions is explained in Section 2. Section 3 of the chapter examines the evaluation techniques. It also outlines the capital budgeting practices in India. The last Section summaries the main points.

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