Explain capital budgeting, and list each of the five steps of the capital budgeting decision process ...

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.