What do you mean by Selection in capital budgeting ?

What do you mean by Selection in capital budgeting ?

Selection follows, and usually overlaps, analysis. It addresses that -Whether the project worthwhile? A broad range of appraisal criteria have been suggested to evaluate the worth while ness of a project. They are usually divided into two broad categories, viz, non- discounting standard and discounting standard. The main non-discounting standard is the payback time and the accounting rate of return and the benefit cost ratio. To apply the various appraisals standard cut-off principles have to be specified. These are fundamentally a function of the blend of financing and the intensity of project risk. While the former can be defined with comparative simplicity, the latter strictly tests the capability of the project evaluator. Certainly, in spite of a wide range of tools and techniques for risk analysis (sensitivity analysis, Monte simulation, decision tree analysis, portfolio theory, capital asset pricing model, and the like), risk analysis remains the most inflexible part of the project valuation exercise.