Question

Arrange the following steps involved in capital budgeting in order of their occurrence:
i) Project selection
ii) Project appraisal
iii) Project generation
iv) Follow up
v) Project execution

• A. ii, iii, i, v, iv
• B. iii, ii, i, v, iv
• C. i, iii, ii, v, iv
• D. i, ii, iii, v, iv

Answer 1

The correct option is B iii, ii, i, v, iv

The capital budgeting process consists of five steps:

1. Identify and evaluate potential opportunities

2. Estimate operating and implementation costs

3. Estimate cash flow or benefit

4. Assess risk

5. Implement