section two - Capital Budgeting Individuals make capital...

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Capital Budgeting Individuals make capital expenditures when they buy a new home, car, or television set. Similarly, businesses make capital expenditures when they modernize plant facilities or expand operations. Companies like Campbell Soup must constantly determine how to invest their resources. Other examples: Hollywood studios recently built 25 new sound stage projects to allow for additional filming in future years. Also, Union Pacific Resources Group Inc. announced that it would cut its capital budget by 19% in order to use the funds to reduce its outstanding debt. In business, as for individuals, the amount of possible capital expenditures usually exceeds the funds available for such expenditures. Thus, the resources available must be allocated (budgeted) among the competing alternatives. The process of making capital expenditure decisions in business is known as capital budgeting . Capital budgeting involves choosing among various capital projects to find the one(s) that will maximize a company's return on its financial
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section two - Capital Budgeting Individuals make capital...

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