What do you mean by Planning in capital budgeting?
What do you mean by Planning in capital budgeting process ?
The planning phase of a firm’s capital budgeting process is concerned with verbalization of its wide investment strategy and the creation and preliminary screening of project proposals. The investment strategies of the firm describe the wide areas or types of investments the firm plants to undertake. These give the framework which shapes, guides, and define the identification of individual project opportunities.
Once a project proposal is recognized, it needs to be examined. To start with, a preliminary project analysis is done. An introduction to the full blown possibility study, this exercise is meant to judge (i) whether the project is prima-facie worthwhile to assess a possibility study and (ii)what aspect of the project are grave to its visibility and thus warrant an in – depth investigation.