Capital budgeting, also known as capital investment appraisal or investment appraisal, is the process by which an organization evaluates different investment projects to determine which is likely to provide the highest financial return.
Economic value is the present value of future cash flows expected to be generated by an asset. It provides a measure of the worth of an asset considering its future income and cost streams.
A feasibility study is an analytical process used to determine the viability of a project, venture, or business activity. It assesses various aspects, including financial, technical, legal, and operational factors, to evaluate the potential for successful completion and a satisfactory return on investment.
Investment appraisal, also known as capital budgeting, involves evaluating the financial viability of a potential investment or project. It assesses whether the investment will yield adequate returns to justify the initial outlay.
The required rate of return (RRR) represents the minimum return an organization deems necessary to justify an investment, expressed as a percentage.
The weighted average cost of capital (WACC) represents a firm's average cost of capital from all sources, including both equity and debt, weighted by their respective usage in the firm's capital structure.
