Explain how capital budgeting processes result in the wealth maximization and give example

As we know that capital budgeting decision help organization to evaluate best investment opportunities and by selecting best capital investment opportunities we receive higher return and increase the capital structure of organization.By using capital budgeting decision successfully the value of shares increases which help organization to achieve their goal wealth maximization.

For example an organization has 10000 shares and value of organization is $1000000.Company make an investment in machinery which provide return on investment @10%.

So now the value of organization =$1000000+10% of $1000000=$1100000.

So the wealth maximization is achieved by capital budgeting process.