# Capital Budgeting

*Saving & Investing — Finicade finance glossary*

Capital budgeting is how firms decide which big, long-term investments to make, weighing each project's future cash flows against what it costs.

How firms decide which big, long-term investments to make — new factories, products, acquisitions — by weighing each project's future cash flows against its cost. NPV and IRR are its main tools.

**Related terms:** [NPV (Net Present Value)](https://finicade.com/glossary/npv), [IRR (Internal Rate of Return)](https://finicade.com/glossary/irr), [WACC](https://finicade.com/glossary/wacc)

**Taught in:** Charter Climb — The Analyst's Exam

Source: https://finicade.com/glossary/capital-budgeting