Explore BrainMass

Capital budgeting and proposed budgets

How is capital budgeting used in an organization? What are the considerations that need to be analyzed when setting up a proposed budget?

Solution Preview

An organization uses capital budgeting to determine if and when major assets and projects should be taken on, and which method would be best for doing so. There are several main methods used by organizations in capital budgeting, and the company usually changes methods based on the purchase or project being considered. The main methods are the net present value method, the internal rate of return method, and ...

Solution Summary

The solution provides a thorough discussion with references that examines how a capital budget is used in an organization, and also examines the considerations needed to be analyzed when setting up a proposed budget. This solution is written based on 25+ years of professional experience in the business, accounting, and finance industries.