Arrange the steps of Capital Budgeting Process in correct sequence.

A. Preparation of Capital Budget and Appropriation

B. Performance Review

C. Assembling of Investment Proposals

D. Identification of Investment Opportunities

E. Decision Making

Choose the correct answer from the options given below:

Correct option is A

The capital budgeting process involves evaluating and selecting long-term investments to maximize the organization’s value. The steps are:
1. Identification of Investment Opportunities (D):
· Identify potential projects or investment opportunities, such as expansions, new projects, or cost-saving measures.
2. Assembling of Investment Proposals (C):
· Collect detailed proposals, including estimated costs, timelines, and potential returns.
3. Decision Making (E):
· Evaluate proposals using techniques like Net Present Value (NPV), Internal Rate of Return (IRR), or Payback Period, and select the most viable ones.
4. Preparation of Capital Budget and Appropriation (A):
· Formulate a budget to allocate resources and secure approvals from management.
5. Performance Review (B):
· Assess the outcomes of implemented projects to compare actual performance with projected results and identify lessons for future projects.