Steps In Capital Budgeting

If an individual investor identifies and invests in a stock or bond whose expected return is greater than the cost of funds, the investor's portfolio will increase in value. Similarly, if a firm identifies or creates an investment opportunity with a present value greater than its cost, the value of the firm will increase. The more effective the firm's capital budgeting process, the higher its growth rate and the greater its future value. In theory, the capital budgeting process involves six logical steps.

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