TABLE OF CONTENTS

Introduction

• Problem studied……………………………………..
• Background information…………………………….
• Research goals……………………………………...

Preliminary details
• Literature survey……………………………………
• Theoretical framework……………………………..
• Hypothesis formulation…………………………….

Research design
• Type and nature of study………………………….
• Sampling technique………………………………..
• Data collection methods…………………………..

Results of data analysis

• Hypothesis substantiated/unsubstantiated…….

Conclusion

Recommendations

Limitations of study

Acknowledgments

References

1
 EXECUTIVE SUMMARY

We recently conducted a comprehensive survey that analyzed the current

practice of corporate finance, with particular focus on the areas of capital
budgeting. The survey results enabled us to identify aspects of corporate
practice that are consistent with finance theory, as well as reconcile with what
is teach in our business schools today. In presenting these results, we hope
that some practitioners will find it worthwhile to observe how other companies
operate and perhaps modify their own practices.

The results of our survey were reassuring in some respects and surprising in
others. With respect to capital budgeting, most companies follow academic
theory and use discounted cash flow (DCF) and net present value (NPV)
techniques to evaluate new projects. But when it comes to making capital
structure decisions, corporations appear to pay less attention to finance
theory and rely instead on practical, informal rules of thumb. In order to
remain profitable in a global market raising producers are developing
alternative production systems.

The primary aim of these alternative systems is to lower costs, increase

revenue and lower the producer’s exposure to risk. Production costs are
lowered primarily through a transfer of investment from temporary labor to
capital investment in machinery. Revenues generated by these new systems
are increased due to increase yields. Finally, exposure to weather and labor
availability risk are reduced under these alternatives.
This BASIC Report provides measurement of the firm performance and firm
size under different capital budgeting techniques. The firm performance is
measured by growth in sales level, tangibility and profitability. This process
allowed us to evaluate the amount of time necessary to repay the investment
required for each system, to evaluate the net present value of the alternatives,
and to calculate two rates of return measures. One rate of return measure
allows for reinvestment, while the other precludes reinvestment.

2
 INTRODUCTION

Since the early l950s, the academic community has tried to convince
corporate managers that there are sophisticated techniques that can improve
the capital budgeting decision-making process. Over the years, many studies
including Klammer (1972), Gitman and Forrester (1977), Kim and Farragher
(1981), Bierman (1993), and Farragher, Kleiman and Sahu (1999) have
documented a trend toward increasing business use of such sophisticated
capital budgeting techniques. However, there is no clear evidence whether
better performing companies are more likely to employ sophisticated capital
budgeting processes than are lower performing companies.

Illustrations are commonly showing that a firm using a sophisticated

technique, such as discounted cash flow, will make better decisions and thus
perform better than the firm using less acceptable methods, such as payback.
Despite this, previous research has indicated that the spill-over from theory to
practice has been slow. However, a recent study by the author indicates that
the preferred techniques are increasingly being used. The primary purpose of
this study is to determine if a firm's performance and firm size is related to the
sophistication of the capital investment procedures and standards it uses.

Attention is directed at the relationship of performance, size and capital

budgeting procedures because the future of the firm is dependent largely on
the investment decisions of today. A performance measure was chosen and
related to questionnaire responses through the use of regression analysis. For
this study a restrictive meaning is given to capital budgeting. Attention is
directed primarily to those steps that lend themselves to generalization. These
include: the various analytical systems used, some factors affecting the rate of
return, the availability of funds, long-range plans, search for alternatives,
standard forms, and steps that go into the determination of expected cash
flows. Cost of capital and its measurement are not specifically under
consideration in this study.

3
 PROBLEM AREA
“Which variable firm performance, growth, profitability has more impact on
capital budgeting techniques?”
Our research area is Finance and in making financing decisions some firms
do not use capital budgeting techniques, which ultimately affect their firm
performance and size.

OBJECTIVE OF RESEARCH
Our objective is to study that how the Capital budgeting techniques have
influence on firm size and [particularly its performance.

BODY OF THE REPORT

LITERATURE SURVEY

Capital budgeting techniques and firm performance:

Thomas (1973) argued:

The idea conveyed in this journal is of firm should use sophisticated

technique, such as through discounted cash flow better decisions can be
taken and firm performs better than the firm using less acceptable methods,

4
 such as payback. A recent study by author indicates that the use of preferred
techniques has increased. Here the main focus is on relationship of
performance and capital budgeting procedures because firm’s future is
dependant of today’s investment decisions .To focus on whether capital
budgeting techniques are related to performance, the operating rate of return,
as defined in this journal, was adopted. Hypothesis testing shows that the
operating rate of return reduces variations from known true rates of return
caused by variability of following:

 Differences in the application of accounting principles and procedures.

 Differences in the method of financing investments.
 The occurrence of unusual events.

Basic need is to understand that which technique or method should be used

for analyzing investment. The use of capital budgeting techniques also
depends on size of firm; if firm is bigger and diversified then traditional
techniques will not be that much acceptable then firm should approach
contingent techniques. If firm is using more them one technique
simultaneously than will be placed in category of highest sophistication. Also
depends on firms capital intensity, risk of firm and risk of project .Here Capital
budgeting techniques are dependent on:

 Size of firm
 Capital intensity
 Risk of firm
 Risk of project

The adaptation of capital budgeting techniques by

agriculture:
teues:

Agricultural co-operatives like other businesses, is operating in increasing

Competitive environment. And sometimes in aggressive economic
environment. So they need to serve effectively to their members if they want
to survive in such a competitive market for this they have to reduce cost and
follow sophisticated capital budgeting techniques .But unfortunately
agricultural sector is unwilling to use sophisticated techniques and wants to
follow traditional approaches .The major conclusion of this journal is that
agricultural sector isn’t utilizing discounted capital budgeting techniques in
their capital investment decision making and in this research correlation found
between the utilization of internal rate of return and Net present value. And
this indicates a tendency of using multi-method approach and giving also
opportunity to become more sophisticated cooperatives

5
 More sophisticated planning and budgeting techniques such as capital
budgeting will improve the effectiveness and efficiency of agricultural co-
operatives in meeting their members’ marketing and production needs.

So this sector face evils because of capital budgeting decisions, three

discounted cash flow techniques can be utilized by agricultural sector:

 net present value approach (NPV)

 internal rate of return approach (IRR)
 The profitability index (PI)

Capital budgeting techniques and technology

Aranoff (1992) argued:

Capital budgeting is depends upon the technology advancement

and demand fluctuations. The writer is saying that as the technology is
changing so the firm has to improve by carefully considering the fluctuations
in demand and can make better decisions if they use capital budgeting
techniques. Its basic aim is to maximize the profits of the company by seeing
the after text cash flows of investments. In this the dependent variable is
capital budgeting and independent variable is technology and demand
fluctuations. Much work in the journal is based upon some economic
assumptions. These assumptions are used for capital budgeting analysis in
technology and demand fluctuations. Those assumptions are:

1. Durable and specific assets: The durable assets are useful for many
years economically. While the specific assets produce only specific type of
products. They contribute to long term economic benefit to the manufacturer.
2. Demand fluctuations: In demand fluctuations there is quoted- price
system and specific and durable assets which lead to idle capacity and is
considered as a desirable situation.
3. Plant or equipment of each technology has a certain practical capacity, that
is, an operating rate that minimizes total costs per unit. A manager can run
the plant or equipment beyond its capacity, to a degree, but only by paying an
overload or overtime premium.
In last of this journal I would suggest that company should use all alternatives
of investment, technologies available and after tax discounted cash flows and
the manager should start with one technology and do incremental after-tax
cash flow analysis to find the level of investment that yields the highest NPV.

Capital budgeting techniques:

6
Brick and Weaver (1984) argued:

The project investment can be evaluated through 4

different techniques. He told the use of after- tax weighted average cost of
capital (ATWACOC) as a discount rate for determining net present value and
the before-tax weighted average cost of capital (BTWACOC) should be used
to discount cash flows which incorporate the tax deductibility of interest
expense. The Equity Residual (ER) approach defines project net cash flow
from the stockholders' perspective and values the flows by the cost of equity.
ER is equivalent to ATWACOC and BTWACOC if market weights are
constant. In this the dependent variable is profitable investment and
independent variable is capital budgeting techniques. The basic purpose of
this paper is to for capital budgeting techniques. This comparison is done
through CAPM approach i-e capital asset pricing model. It is not the accurate
method it is simply used for convenience.

The capital budgeting techniques are:

1. After-Tax Weighted Average Cost of Capital (ATWACOC):

2. Before-Tax Weighted Average Cost Of Capital (BTWACOC):
3. The Equity Residual Method (ER):
4. Adjusted Present Value (APV):
In this we have compared the four techniques of capital budgeting in profitable
investments. The capital budgeting would be accurate depending upon the
assumed method of project financing and the time pattern of risk. It is also
stated that these four techniques give biased results. ATWACOC has fewer
errors.

Capital budgeting techniques and reinvestment rate:

Meyer (1979) argued:

Mutually exclusive investment proposals like the choice of NPV and IRR for
selecting among identical costs has received wide attention in the financial
literature it received enormous study more than twenty years relating to
capital budgeting. Neither the NPV nor IRR criteria make any assumption
about the reinvestment of cash flows the selection of an optimal criterion must
be accompanied by explicit reinvestment rate.

The problem in evaluating the appropriate investment rate is:

“If financial capital is freely available at any point in time, the

reinvestment rate should be the marginal cost of the alternative funds, i.e., the
firm's cost of capital. In such a case, the present value criterion is to be
preferred.” In this the independent variable is capital budgeting techniques
and the dependent variable is reinvestment rate. The firm always invests to

7
the point where marginal revenue is equal to marginal cost and that the
appropriate reinvestment rate must be the firm's marginal cost of capital.

Capital budgeting techniques and firms expenditure:

Klammer (1979) argued:

During the capital budgeting process managers can

accept or reject financial analysis for capital expenditure. Financial analysis is
classified into two broad categories:
 Sophisticated budgeting techniques it includes risk, cash flows,
and the time value of money
 Simple budgeting techniques it includes present values,
incorporate risk

Different firms who employ knowledgeable, advanced and cultured capital

budgeting techniques should try to perform well theoretically rather than those
firms which use simple and not sophisticated techniques. This question has
produced different results. For this purpose different test has been conducted
in different firms ,and from these tests it is concluded that it is not necessary
that advanced capital budgeting techniques result in shape of better firm
performance but it could be possible that during an economic stress faced by
company these techniques help them to bring recovery of that firm. In this the
dependent variable is firm performance and the independent variables are
capital budgeting techniques, environmental uncertainty and reward system.
The purpose of this research is to find out the performance of firm due to
changing the techniques.
Robert & Randolph (1972) argued:

Suggests that for the treatment of the risk in capital budgeting in most
of the books at least three general methods exists whish are as follows:

 Risk adjusted discount method (RAD)

 Certainty equivalent method(CE)

 Single certainty equivalent method(SCE)

Among this risk adjusted discount method and the certainty equivalent
method none of them is being adopted as an ideal for the evaluation of the
investment proposals. Therefore the third approach has merged which is
being called as the single certainty equivalent method. This 3rd method/
approach is based upon the techniques which are first being introduced by
HILLIER but this approach also includes many variations.
Single Certainty Equivalent Method:
Theoretical Deficiency of SCE Method:
Practical Deficiencies of SCE Method:

8
Issues are that the errors made by the SCE method on the capital budgeting
proposal is quiet large.
The major purpose of this SEC method is to assess the probability
distribution of the specific project in the capital budgeting techniques. Its major
fault is that it misstates the value of typical cash flow related to the previous
one due to which the market discount rates becomes higher for that specific
project than the riskiness of the specific project. The error is inherited in this
method and cannot be removed therefore it creates a quiet large problem.
Therefore RAD and CE methods are being given preference over SCE
method because they both don’t possess this deficiency therefore they can be
used quiet easily as compare to the SCE method.

Panel discussion/Capital budgeting:

Weaver, Cason & Daleiden (1989) argued:

The three of them gave presentations about the capital budgeting process. In
which they proposed various things he works in a company named DuPont
which ranks ninth among the 500 companies which makes commodities. Their
principle methodology currently is IRR. Their capital is estimated periodically
by a variety of methods, all of which lead to about the same answer. Many
years ago, appropriation requests tended to be thought of almost in isolation.
So, business plans will be drawn up to look ahead one, two, five, and ten
years into the future for each major business segment, and this plan may or
may not involve major capital investment. If it does, the capital investment will
be studied and preliminary numbers will be drawn up of the type learned
about in a beginning finance class, and then the process will move forward.

THEORATICAL FRAMEWORK

INDEPENDANT VARIABLES

9
CAPITAL BUDGETING:
This study is an attempt to measure the relationship between capital
budgeting sophistication and business performance.

 “Capital budgeting (or investment appraisal) is the planning process

used to determine whether a firm's long term investments such as new
machinery, replacement machinery, new plants, new products, and
research development projects are worth pursuing”.

 According to investopedia
“The process in which a business determines whether projects such as
building a new plant or investing in a long-term venture are worth
pursuing. Oftentimes, a prospective project's lifetime cash inflows and
outflows are assessed in order to determine whether the returns
generated meet a sufficient target benchmark. It’s the process for
determining the profitability of a capital investment”.

SOPISTICATED CAPITAL BUDGETING TECHNIQES:

Following capital budgeting techniques will be used in evaluating investment:

 Discounted Payback period (DPP)
 Net present value (NPV)

10
  Internal rate of return (IRR)
 Modified internal rate of return (MIRR)

Discounted payback

“Length of time required to recover the initial cash outflow from the
discounted future cash inflows. This is the approach where the present values
of cash inflows are cumulated until they equal the initial investment”.

Previous findings:
Bhandari, Shyam B. argued that among all of the capital budgeting techniques
NPV ensures profitability but not liquidity, but PP ensures liquidity not
profitability, but DPP ensures both criterions. A project’s useful life is exposed
to risk due to changes in political, technological, regulatory factors and
change in consumer taste. In such scenario the use of the NPV, the IRR, the
PI (which all assume a fixed life) as decision making criterion become less
desirable than the DPP.

Net present value

“Present value of an investment's future net cash flows minus the initial
investment. If positive, the investment should be made (unless an even better
investment exists), otherwise it should not”.

Internal rate of return

"The IRR for an investment is the discount rate for which the total
present value of future cash flows equals the cost of the investment. It is the
interest rate that produces a 0 NPV”.

11
Previous findings of NPV and IRR:
Ray Martin after conducting the research on capital budgeting techniques has
concluded his finding that has shown the utility of internal rate of return and
net present value. According to him, practically speaking and properly viewed,
IRR yields the same decision as does NPV except under some extreme
circumstances that present few limitations in practice. When IRR is
incalculable, NPV is suspect. No attempt has been made to suggest that IRR
is superior to NPV. They are best used together. NPV and IRR give consistent
answers if handled and viewed properly. Together they give an indication of
risk as well as return. IRR is not affected by the size of the cash flows. Finally,
IRR is useful alone in virtually all time-value of-money problems.
.

Modified internal rate of

return
“The rate of return which equates the initial investment with a projects
terminal value, where the terminal value is the future value of the cash inflows
compounded at the required rate of return”.
This better reflects the profitability of a project, as standard IRR assumes the
cash generated from the project is reinvested at the IRR, whereas MIRR
assumes that cash is reinvested at the firms cost of capital.

Previous findings:
Cary and Dunn argued While rates of return methods, in general, and the
Internal Rate of Return (IRR) method in particular, have been found to be
privileged by a majority of researchers (Gitman & Forrester, 1997), it has also
been shown that the IRR method can lead to erroneous rankings of mutually
exclusive projects when compared to the Net Present Value (NPV) method of
capital budgeting (Fisher, 1930). The differences in rankings may be caused
by the implied reinvestment rate assumption of the IRR method (Fisher,
1930), or by differences in the size of the projects, the scale problem, or in the
life of the projects, the time span problem. Differences in the risk classes of
the projects and capital rationing can also cause ranking differences. This
paper will assume that all projects are in the same risk class as the firm and
that capital rationing does not exist. The Modified Internal Rate of Return
(MIRR) method of capital budgeting, or similarly the Financial Management
Rate of Return method (Findlay & Messner, 1973), was developed to
overcome the problem of the implied reinvestment rate assumption (Bierman
& Smidt, 1984, Hirshleifer, 1970, Solomon, 1956).
However, when scale or time span differences exist, the MIRR method
may still give rankings of mutually exclusive projects that are different than
NPV (Brigham & Gapenski, 1988). This paper presents an adjustment to the
MIRR method that will give rankings that are consistent with NPV for scale

12
differences and for non-repeatable projects, for time span differences. In
addition, a simplified method of calculating MIRR is developed.

DEPENDANT VARIABLES

Firm’s performance:

“Firm performance comprises the actual output or results of an

organization as measured against its intended outputs (or goals and
objectives).”

Firm’s size:

According to BNET business dictionary

“A method of categorizing companies according to size for the
purposes of government statistics. Divisions are typically micro business,
small business, medium-sized business, and large-sized business”

Previous findings:
Klammer (1973) concluded that the mere adoption of various analytical
tools for capital budgeting was not sufficient to bring about superior operating
performance. In contrast, Kim [1975, 1982] found that firms which used more
sophisticated methods for selecting capital projects tended to have higher
operating rates of return and higher earnings per share. There are several
other factors which may vitiate the improvement of firm performance after a
switch from inexperienced to sophisticated capital budgeting selection
techniques. These factors may have affected the analyses and as such
represent limitations to our work.
Over the years, many studies have documented a trend toward
increasing business use of such sophisticated capital budgeting techniques.
However, there is no clear evidence whether better performing companies are
more likely to employ sophisticated capital budgeting processes than are
lower performing companies.
Since the early 1950s, the academic community has tried to convince
business that there are sophisticated techniques that can improve the capital
budgeting decision-making process. Over the years, many studies including
Klammer (1972), Gitman and Forrester (1977), Kim and Farragher (1981),

13
Bierman (1993), and Farragher, Kleiman and Sahu (1999) have documented
a trend toward increasing corporate use of such sophisticated capital
budgeting techniques.
Performance is measured by an operating rate of return measure
similar to what is used by Klammer. After controlling for company size,
operating and financial risks, Kim and Farragher find a significant positive
relationship between the degree of capital budgeting sophistication and
performance better performing companies are more likely to employ
sophisticated capital budgeting processes than are poorer performing
companies. The Kim and Farragher study is incomplete for two reasons. First,
their capital budgeting sophistication metric is not fully comprehensive. It does
not include whether or not a company's capital budgeting process
incorporates strategic analysis, company-wide return/risk goals, and cash flow
forecasting. And second, the explanatory variables in their regression
equation are not industry-adjusted.
Pike (1984) analyzes the relationship between capital budgeting
sophistication and performance for large, United Kingdom corporations. Like
Kim and Farragher, he employs a single capital budgeting sophistication
metric. The metric incorporates twelve procedural activities (planning,
administration, and control) and sixteen quantitative techniques (evaluation
measures, risk analysis processes, and management science techniques).
After adjusting for company size, capital intensity, operating risk, and industry,
Pike finds a significant negative relationship between capital budgeting
sophistication and performance.

DIAGRAM

14
Net present
value
Firm’s
performance
Discounted
payback
Internal rate
Firms
Size

of return
Modified
internal rate
of return

HYPOTHESIS

Null hypothesis:

15
There is no relationship between sophisticated capital budgeting techniques
and firm’s size and performance. These techniques can’t improve the
performance of firm.

Alternate hypothesis:

The use of sophisticated capital budgeting techniques was not found to be

closely related to performance but still there is a significant relationship
between firm performance and techniques and direction is clear it can be
positive or negative according to different authors. So here hypothesis is non
directional.

RESEARCH DESIGN

PURPOSE OF STUDY:
This study is hypothesis testing because we have both independent and
dependent variables in this study and study which has both dependent and
independent variables is known as hypothesis testing.
NATURE OF STUDY:
As our purpose of study is hypothesis testing so our nature of study will be
quantitative because any study whose purpose of study is hypothesis
testing its nature of study is quantitative.
TYPE OF VARIABLE: The type of variables is independent and
dependent variables. Firm size and firm performance are dependent
variables while capital budgeting techniques are independent variable.
NATURE OF EACH VARIABLE: firm performance and firm size are
categorical in nature because a firm performance can be good bad or
average and firm size can be small or large while capital budgeting
techniques are quantitative in nature because these can be used for
calculating firm performance and other things.
TYPE OF INVESTIGATION: The type of investigation is measure of
association and in that it is correlation because we have multiple
independency and 2 dependent variables.

16
 STATISTICAL TECHNIQUE: The statistical technique being used in this
study is multiple regressions because when we have correlation study
the sampling technique which is used is multiple regressions.
TIME HORIZON: Time horizon is longitudinal because we are not
collecting data at one point of time so our study would be longitudinal.
UNIT OF ANALYSIS: our unit of analysis is organization because we are
measuring the influence of capital budgeting techniques on firm
performance and firm size.

RESULTS OF DATA ANALYSIS

TANGIBILITY
Correlations

2. Fixed
assets after
deducting 4. Total
accumulated assets
depreciation (B4+C2)
2. Fixed assets after Pearson
1 .960(**)
deducting accumulated Correlation
depreciation Sig. (2-tailed) .000
N 3399 3399
4. Total assets Pearson
.960(**) 1
(B4+C2) Correlation
Sig. (2-tailed) .000
N 3399 3407

Model Summary
Mode R R Adjusted Std. Error
l Square R Square of the Change Statistics
Estimate R F df1 df2 Sig. F
Square Change Change

17
 Change
1 40344.5
.960(a) .922 .922 1850.7085 .922 1 3397 .000
66

Coefficients
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 2275.215 246.883 9.216 .000
3. Gross
2.997 .087 .515 34.516 .000
profit

PROFITABILILTY

Correlations

7. Net
profit 4. Total
before tax assets
(D5-D6) (B4+C2)
7. Net profit before tax Pearson
1 .578(**)
(D5-D6) Correlation
Sig. (2-tailed) .000
N 3397 3397
4. Total assets Pearson
.578(**) 1
(B4+C2) Correlation
Sig. (2-tailed) .000
N 3397 3407

Coefficients

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 2275.215 246.883 9.216 .000

18
 3. Gross
2.997 .087 .515 34.516 .000
profit

Model Summary

Change Statistics
Std. Error R
Mode R Adjusted of the Square F Sig. F
l R Square R Square Estimate Change Change df1 df2 Change
1 40344.5
.960(a) .922 .922 1850.7085 .922 1 3397 .000
66

GROWTH

Correlations

3. Gross 1. Gross
profit sales
3. Gross profit Pearson
1 .515(**)
Correlation
Sig. (2-tailed) .000
N 3329 3303
1. Gross sales Pearson
.515(**) 1
Correlation
Sig. (2-tailed) .000
N 3303 3307

Coefficients
Unstandardized Standardized
Coefficients Coefficients

Model B Std. Error Beta t Sig.

1 (Constant) 2275.215 246.883 9.216 .000
3. Gross profit 2.997 .087 .515 34.516 .000

Model Summary

19
 Change Statistics
Adjusted Std. Error R
Mod R R of the Square F Sig. F
el R Square Square Estimate Change Change df1 df2 Change
1 1703.10
.578(a) .334 .334 1610.4182 .334 1 3395 .000
8

We are measuring the firm performance by growth in sales, profitability

and tangibility. The table of correlation shows the results of data analysis
that the firm performance has a strong correlation with growth, tangibility
and profitability and is highly significant in nature. As the profitability and
growth of firm will increase the firm performance will increase. The
tangibility and firm performance are strongly correlated with eachother and
are also highly significant in nature. While the profitability and growth are
also strongly correlated with firm performance and are highly significant in
nature. The table of coefficients helps us to see which among the 3
variables most influence the firm performance we look at column Beta
under standardized coefficients we see that the beta is .515 for growth
which is significant at the .000 level and the positive beta shows that the
firm performance can be increased by increasing the growth of the firm.
The table of model summary in which the R square (.334) which is the
explained variance, is actually the square of multiple R (.578)2 in growth
table.

CONCLUSION

Despite a growing adoption of sophisticated capital budgeting methods, the

regression results did not show a consistent significant association between
performance and capital budgeting techniques. This indicates that the mere

20
adoption of various analytical tools is not sufficient to bring about superior
performance. The use of sophisticated capital budgeting techniques was not
found to be closely related to performance, this finding should not be
interpreted to mean that the sophisticated techniques are not preferable.
These techniques can help in decision making but no one has proved it

LIMITATIONS

• Time for conducting research was very less and we were not able to
study the factors in depth.

• Missing values are excluded from the analysis and this makes the
sample size for some of the time periods smaller than others.
Therefore it is possible that some values show up to be significant in
some time periods but not in others due to the sample size.

ACKNOWLEDGEMENT

21
Great is ALLAH and great is HIS mercy. Who taught by the pen, taught men
what he knew not. It is through his boundless grace and infinite mercy that we
have been able to bring out this.

Special praise is for our beloved HOLY PROPHET (S.A.W) whose

inspiration is for all who seek knowledge and is symbol of knowledge and
guidance for humanity as a whole.

We do not have words to express deep gratitude and thanks to our

respective supervisor Ms. HAMEEDA AKHTAR who helped and encouraged
us in every possible way and took personal interest to help complete this in
time. No matter how many times we went to bother her with our problems, she
never seemed irritated. In return, all we can do is to offer our greatest respect
and honor for a great teacher.

We are also profoundly grateful and we also extend our sincere

appreciation to all our class fellows. Words are lacking to express obligations
to our affectionate parents, their love, good wishes, inspirations and
unceasing prayers without which the present destination would have been
merely a dream.

All our prayers and gratitude’s for them who prayed, helped and
encouraged us to achieve our goal.

REFERENCES:

22
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ownership, and corporate diversification. Journal of Finance, 5(2), 91-
97.

4. Thomas, K. (1973).Capital budgeting techniques and firm performance.

Journal of the Accounting Review, 48 (2), 353-364.

5. John, B., Morgan, P., & Linda S. (1997). The adoption of capital
budgeting techniques by agricultural. Journal of Business and
Economics, 99 (4), 128–132.

6. Aranoff, G., (1992). Capital budgeting with technology choice and

demand fluctuations in a simple manufacturing sample. Journal of
Managerial and Decision Economics, 13 (5), 409-420.

7. Brick, I., & Weaver, D. (1984). A comparison of capital budgeting

techniques in identifying profitable investments. Journal of Financial
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