Consider the following two hypothetical statements from corporate managers

Summarized the data and information in the quesion;

Consider the following two hypothetical......

(A)Capital budgeting involves choosing projects that add value to a company.The capital budgeting process can involve almost anything including accuring land (or)purchasing fixed assets like a new truck (or) machinery.

Corporation are typically required (or) at least recommended toundertake those projects that will increase profit ability and thus enhance share holder wealth.

''Share holder will have never known our Capital budgeting deision ''because the capital budgeting decision is both a financial commitment and an investment by talking on a projects the business is making a financial commitment but also investing in its longer term direction that will likely have an influence on future projects the company considers.

When a firm is presented with a capital budgeting decision. One of its first task is to determine whether (or) not the project will prove to profitable . The payback period(ib) internal rate of retuen (jkk) and net present value (NPV) methods are most common approches to project selection.

(B)Capital budgeting decisions involves an outlay of huge some of money. And these transaction are typically irreversible.It is therefore important to get the whole process right in the first step it self. No trails and errors are afferdable at this stage.

However the very nature of capital budgeting decision is such that flow are sewn into its fabric.

This calculation and second guessing are in herent to capital budgeting.The very basis of a capital budgeting decission is an array of assumption, Therefore the real picture may often tend to be far from the anticipated one .

As the risk is the possibility that the choosen action will not result in the desired outcome a capital budgeting project involves numerical risk.

So, the '' Share holder will punish the company when we have made bad capital budgeting decision.