5 Explain the capital Budgeting process and its appraisals Solve the below given problem: Given below are the details on the cash flows of two projects A and B. Compute payback period for A and B.
5 Explain the capital Budgeting process and its appraisals
Solve the below given problem:
Given below are the details on the cash flows of two projects A and B. Compute payback period for A and B.
Cash flows of A and B
Year | Project A cash flows (Rs.) | Project B cash flows (Rs.) |
0 | (4,00,000) | (5,00,000) |
1 | 2,00,000 | 1,00,000 |
2 | 1,75,000 | 2,00,000 |
3 | 25,000 | 3,00,000 |
4 | 2,00,000 | 4,00,000 |
5 | 1,50,000 | 2,00,000 |
Explanation of capital budgeting process and its appraisals.
Solution for the problem
Answer: Capital budgeting process
After the screening of proposals for potential involvement is over, the company should take up the following aspects of capital budgeting process:
- A