Capital Budgeting and Decision Making: A Case Study

Assessment

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Capital budgeting.........................................................................................................................3
Overview of the case...................................................................................................................3
Capital budgeting use in the case study.......................................................................................4
Factors influence Capital financing and allocation functions during Capital Budgeting Process
.....................................................................................................................................................5
Critical review of evaluation.......................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Capital budgeting have been identified to have the paramount level of importance in decision
making aspect. The profitability of business has the concern depends upon the level of
investment made for the longer period. Moreover, the investment has the need to be done
properly though proper evaluating the proposal by the capital budgeting so it needs special care.
in this report there will be clear discussion of the case study which is involving capital budgeting
decision making on the forecasted cash flow for he proposes municipal bus service route. In
addition to that’s the report will discuss on the other factor which are involves Capital financing
and allocation functions during Capital Budgeting Process
MAIN BODY
Capital budgeting
Capitals budgeting is used to have the decision making for the long-term investment in order to
analyse the project are fruitful for the business. In addition, it will be helping out analyse the
expected and required are of return in the upcoming future. It is important to have note that’s
capital expenditure have the requirements of huge amount of funds so before doing such
expenditure in capital asset management do capital budgeting to assure themselves that the
capital spending will bring profits in the business. In the case the firm have the analyse the
various case studies and resources who have the uses of the paybacks method, net present value
and internal rate of return as the important analytical tool which can be used for the finding
accuracy and feasibility in the business decision making. On the other hand, it is important to
note that’s the capital budgeting is done for the long term which is majorly irreversible in
natures. Most of the techniques used in this approach have been based on the assumptions and
proper estimations which will always be remain at point of uncertainty. Hence the capital
budgeting turning out to be retrospective as the inclusion of risk factors and discounting factor
will be remaining subjectivity to the manager perception.
Overview of the case
The report will have been presenting the case study of regional university situated
approximately 25 miles away from the community. The case is based on the actual bus services
as the community is being the significant numbers of the university faculty, staff and students.
In the case the staff member has requested the commuter bus to transport people to and forth the
community down university and vice versa. The student has in roles of the bus service
3