Define the first aspect of capital budgeting decision
The first aspect of capital budgeting decision relates to the choice of new asset out of the alternatives available or reallocation of capital when an existing asset fails to justify the funds committed. Whether an asset would be accepted or not will depend upon relative benefits and returns associated with it. Measurement of the worth of investment proposals is, thus, a major element in the capital budgeting exercise. This suggests a discussion of the methods of appraising investment proposals.