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UNIT-5 Capital Budgeting and Analysis of Risk and Uncertainty

5.1 Capital Budgeting

OVERVIEW OF CAPITAL BUDGETING / H¡${nQ>b ~OqQ>J H$m AdbmoH$Z

Q.45. Explain the meaning of capital budgeting. Discuss its importance in financial de-
cisions.
H¡${nQ>b ~OqQ>J H$m AW© g‘PmB¶o& ’$m¶Z|{e¶b {S>{gO§g ‘| BgHo$ ‘hÎd H$s ì¶m»¶m H$s{OE& 404

PROCESS OF CAPITAL BUDGETING/ H¡${nQ>b ~OqQ>J H$s à{H«$¶m

Q.46. Explain the important steps in Capital Budgeting Process.
H¡${nQ>b ~OqQ>J à{H«$¶m H$s ‘hËdnyU© ñQ>oßg g‘PmBE& 408

CAPITAL BUDGETING: PAY-BACK PERIOD METHOD
H¡${nQ>b ~OqQ>J: no-~¡H$ nr[a¶S> ‘oWS>

Q.47. Discuss the characteristics and relative merits and demerits of pay-back period
method.
no-~¡H$ nr[a¶S> ‘oWS> H$s {deofVmE§ VWm g§~§{YV JwU VWm Xmof H$s ì¶m»¶m H$s{OE& 410
CAPITAL BUDGETING: AVERAGE RATE OF RETURN (ARR) METHOD
H¡${nQ>b ~OqQ>J: [aQ>Z© H$m EdaoO aoQ> (ARR) ‘oWS>

Q.48. Write a short note on Average Rate of Return (ARR).
[aQ>Z© Ho$ EdaoO> aoQ> (ARR) na g§{já {Q>ßnUr {b{IE&
OR
How do you take decision under ARR method? Write its merits and demerits.
ARR {d{Y Ho$ A§VJ©V Amn {ZU©¶ H¡$go b|Jo? BgHo$ JwU VWm Xmof {b{IE& 416
CAPITAL BUDGETING: NET PRESENT VALUE (NPV) METHOD
H¡${nQ>b ~OqQ>J: ZoQ> n«oO|Q> d¡ë¶y (NPV) ‘oWS>

Q.49. "The best method for evaluation of investment proposal is the net present value
method or discounted cash flow technique." Elaborate. / ''{Zdoe àñVmd Ho$ ‘yë¶m§H$Z
Ho$ {bE g~go AÀN>r ‘oWS> ZoQ> àoO|Q> d¡ë¶y ¶m {S>ñH$mC§Q> H¡$e âbmo VH$ZrH$ h¡&'' dU©Z H$s{OE&
OR
Discuss the merits and limitations of NPV method.
NPV ‘oWS> Ho$ JwU VWm gr‘mE§ H$s ì¶m»¶m H$s{OE& 421

BRILLIANT’S  Corporate Finance  13