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Capital budgeting refers to the financial management process of making long-term investment decisions in fixed assets, such as property, plant, equipment, and technology. This process involves conducting financial analysis to determine the potential profitability and risks of these investments, taking into account factors such as initial costs, projected cash flows, and the cost of capital. By evaluating projects based on their expected returns and comparing them to the organization's cost of capital, managers can make informed decisions about which investments will best support the company's strategic goals and maximize shareholder value over the long term. Capital budgeting is a critical component of financial management for businesses seeking to grow and maintain their competitive advantage in the marketplace.