Define capital budgeting and describe 5 steps in the capital budgeting process

Subject: Business    / Finance

600+ word written assignment w/ citations in APA format Due by Saturday, 11:59 p.m. (MT) Address the following questions: …..

1) Define capital budgeting and list and briefly describe the 5 steps in the capital budgeting process……

2) Define and describe a project’s Net Present Value……

3) Describe how Net Present Value is used to choose among projects in the capital budgeting process…… Capital Budgeting is:

How a firm determines where to spend its’ money (i.e., capital) – which financial alternative(s) to pursue, which project(s) to invest in, etc.

Identification, development, selection, implementation, follow-up. Net Present Value = (Present value of expected cash flows,( i.e., revenues benefits)) – (cost of project)…NPV is used in step #3 (selection)……RE: question #3: If NPV >0 the project adds value to the firm and helps maximize shareholder value which is a key goal of management of a company.