Answer
The five stages in capital budgeting are:
1. Identification Stage: This stage involves determining the types of capital investments available to achieve organizational objectives and strategies.
2. Information-Acquisition Stage: In this stage, data is gathered from all parts of the value chain to evaluate alternative capital investments.
3. Forecasting Stage: Here, future cash flows related to various capital projects are projected.
4. Evaluation Stage: Capital budgeting methods are used in this stage to select the best alternative for the firm.
5. Financing, Implementation, and Control Stage: This stage involves funding projects, initiating them, and monitoring their performance.
Work Step by Step
The five stages in capital budgeting are:
1. Identification Stage: This stage involves determining the types of capital investments available to achieve organizational objectives and strategies.
2. Information-Acquisition Stage: In this stage, data is gathered from all parts of the value chain to evaluate alternative capital investments.
3. Forecasting Stage: Here, future cash flows related to various capital projects are projected.
4. Evaluation Stage: Capital budgeting methods are used in this stage to select the best alternative for the firm.
5. Financing, Implementation, and Control Stage: This stage involves funding projects, initiating them, and monitoring their performance.
