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Frequently Asked Questions

  • How do you calculate capital budgeting?

    Capital budgeting integrates assessing possible investments or projects using techniques such as Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, and Profitability Index. These estimations evaluate the long-term profitability and ease of an investment relative to its cost.

  • What is the simplest method of capital budgeting?

    The easiest method of capital budgeting is the Payback Period. It estimates the time needed for an investment to recover its primary cost. A shorter payback span is usually preferred. It indicates faster returns and lower risk.

  • What are the 4 A's of Capital budgeting?

    The 4 A’s of budgeting are Allocation, which defines how resources are allocated; Awareness, which guarantees that all stakeholders comprehend the budget; Adjustment, allowing for flexibility in response to changes; and Accountability, guaranteeing commitment for financial control.

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