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Capital budgeting refers to the process of making long-term investment decisions in fixed assets, such as property, plant, and equipment (PP&E), that are expected to generate future economic benefits for a business. It involves evaluating potential projects based on their expected cash inflows and outflows over time, considering factors such as the initial cost of the investment, the timing of cash flows, and the associated risks. The goal of capital budgeting is to identify projects with positive net present values (NPVs) that align with the strategic objectives and financial goals of the organization. Effective financial management and planning require a systematic approach to capital budgeting, as these decisions have a significant impact on the long-term profitability and growth prospects of a business.