Capital Budgeting is the process of predicting expenses and future revenues to evaluate the potential profitability of a major project. It involves the business decision-making process of allocating available resources among competing projects and selecting those with the highest expected return. A capital budget typically covers one year’s worth of expenses, and it must be flexible enough to account for changes in market conditions or company objectives. To make the best possible decisions, businesses use a mix of qualitative and quantitative analysis, including discounted cash flow models that help investors weigh risks against rewards. With a well-informed capital budget, companies can ensure they are making smart investments and maximizing their profits.