What types of projects require the least detailed analysis

Anonymous
timer Asked: May 3rd, 2014
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Question Description

What types of projects require the least detailed and the most detailed analysis in the capital budgeting process and why?    150 words

Tutor Answer

alizeh707
School: University of Maryland

The investment decisions of a firm are generally known as the capital budgeting, or capital expenditure decisions. The firm’s investment decisions would generally include expansion, acquisition, modernization and replacement of the long-term assets. Sale of a division or business (divestment) is also as an investment decision.

The capital budgeting has following characteristics:

The exchange of current funds for future benefits.

The funds are invested in long-term assets.

The future benefits will occur to the firm over a series of years.


Hence the projects which are of long term nature and above characterstics require detailed analysis in the capital budgeting processes.



Reference:

1.Management accounting by Khan & Jain


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Anonymous
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