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StormLrd StormLrd
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A year ago
Explain capital budgeting, and list each of the five steps of the capital budgeting decision process model. Include both phases for step five.
Textbook 

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
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A year ago
Capital budgeting is long-run planning for investment projects that usually have a life that is greater than one year.

Step 1    Identify potential capital investments that agree with the organization's strategy.
Step 2    Gather information from all parts of the value chain to evaluate alternative projects .
Step 3    Forecast all potential cash flows attributable to the alternative projects.
Step 4    Determine which investment yields the greatest benefit and the least cost to the   organization.
Step 5    Phase 1: Obtain funding and make the investments selected in step 4.
   Phase 2: Track realized cash flows, compare against estimated numbers, and revise plans if necessary.
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