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Capital budgeting is a financial management process used by businesses to evaluate long-term investments, typically involving significant expenditures on assets such as property, plant, and equipment. It involves analyzing the potential benefits, costs, and risks associated with these investments to determine whether they align with the organization's strategic objectives and financial goals. The goal of capital budgeting is to identify projects that will generate sufficient returns to justify the initial investment and ongoing maintenance costs. This process typically includes forecasting future cash flows, estimating the cost of capital, and conducting sensitivity analyses to assess the impact of various assumptions on project profitability. Effective capital budgeting can help businesses optimize their asset base, improve financial performance, and enhance long-term sustainability.