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Informative Article | Accounting | Papua New Guinea | Volume 7 Issue 8, August 2018 | Rating: 7 / 10
Capital Budgeting and Cost Evaluation Techniques: A Conceptual Analysis
Frank Oki | Sivanathan Sivaruban [2]
Abstract: Capital budgeting decisions are crucial to a firm's success for several reasons. Firstly, capital expenditures typically require large outlays of funds. Secondly, firms must ascertain the best way to raise and repay these funds. Thirdly, most capital budgeting decisions require a long-term commitment. Finally, the timing of capital budgeting decisions is important. When large amounts of funds are raised, firms must pay close attention to the financial markets because the cost of capital is directly related to the current interest rate or investor's expected rate of return. This Published paper focuses on advances in Capital Budgeting Techniques theory through and practical. Also its impact in the decisions of the investment while focusing on evaluation practices such as risk and uncertainty but not considering the numerically appraising of the principles of investment. The sensitivity analysis of capital budgeting depends on a number of uncertain independent variables which may have some impacted on the investment results. The positive value of the investment appraisal is value added to the firm, and it can be enhanced return for the shareholders. The success of the project is assessed on stage post completion audit with proper stage by stage completed.
Keywords: Capital budgeting, Cost analysis, Payback Period, Net Present Value, Accounting Rate of Return, and Internal Rate of Return
Edition: Volume 7 Issue 8, August 2018,
Pages: 1553 - 1557