Journal

BUS 650: Managerial Finance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Critically reflect on the importance of capital budgeting.  Why is this such a heated subject in many boardrooms? How does capital budgeting promote the financial health of an organization? How will you use the financial techniques you have learned this week to promote the financial health of your organization?

Capital budgeting is defined as the process in which a business determines whether projects such as building a new plant or investing in a long-term venture are worth pursuing.  In the video, capital budgeting was described using Present value analysis.  PVA or present value analysis is defined as   a future amount of money that has been discounted to reflect its current value, as if it existed today. The present value is always less than or equal to the future value because money has interest-earning potential, a characteristic referred to as the time value of