International Journal of Innovative Technology and Research
Abstract
This paper has provided a critical review of the Capital Budgeting and an attempt to re counsel it with the reality that faces the financial executive efficiencies of model for capital budgeting which can be justified only in relation to the earning for objectives and goals. If the objective is given the top priority by management it minimizes the next year’s earnings per share, it may be fool hardy indeed to drop a capital budgeting technique that attempts to minimize the net present value of stream of future cash flows. Because of the inherent differences between accounting income and incremental cash flow would be only by coincidence that an optimal decision would result. The responsibility vests heavily on the shoulders of top management to refine clearly and specifically, what the objectives of the capital budgeting system should be without definition of measure of its effectiveness and one model appears just as acceptable as the other one
