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Define Capital Budgets

Capital Budgets: The procedure of finding out which potential long-term projects are value undertaking, by comparing their estimated discounted cash flows with their internal rates of return.

Capital Budget is the predicted amount planned to be expended for capital items in a specified fiscal period. The capital items are fixed assets like facilities and tools, the cost of which is generally written off over a number of fiscal periods. The capital budget, though, is restricted to the expenditures which will be made in the fiscal year comparable to the associated operating budgets.

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