Abstract

Capital budgeting is finance terminology for the process of deciding whether or not to undertake an investment project. As the objective of the capital budgeting is to add values to the wealth of an owner of a business, the capital budgeting primarily insists the recovery of investments made in the projects. To improve the owner’s wealth, it is important to evaluate and identify profitable projects using some evaluation tools. Concerning the project evaluation, there are traditional and non-traditional tools in application to evaluate the projects in finance and financial management. In this context, this paper illustrates the project evaluation techniques contextually with specific exhibits as examples to make the reader to understand them. And the study is based to see that there is proper allocation of capital on efficient resources and optimum utilization of the available funds to acquire long term assets or investments.

Keywords