Capital budgeting is a process that assess the convenience of carrying out an investment or not. If there are many profitable investments available, the capital budgeting tries to find out which one is more advisable.

What is an Investment Project

An investment project is a detailed proposal of an expenditure of liquid resources, with the objective of taking actions that will lead to future profits.

- An investment project is made before the investment itself.

- An investment implies an expenditure of resources, but it doesn’t necessarily means that those resources are our own resources: a lot of investments are carried out by borrowing money.