Capital budgeting (or investment appraisal) is the planning 
process used to determine whether firm's long term 
investments such as new machinery, replacement machinery, 
new plants, new products, and research and development 
projects are worth pursuing.

Many formal methods are used in capital budgeting, 
including the techniques such as

Net present value 
Profitability index 
Internal rate of return 
Modified Internal Rate of Return, and 
Equivalent annuity. 
These methods use the incremental cash flows from each 
potential investment, or project. Techniques based on 
accounting earnings and accounting rules are sometimes 
used - though economists consider this to be improper - 
such as the accounting rate of return, and "return on 
investment." Simplified and hybrid methods are used as 
well, such as payback period and discounted payback period

capital budgeting is a method of investment decision in  
capita expenditures.  the expenditures ,of which  benefit 
is to be recieved for more than one period.  
 the methods are;
 pay backperiod method
 internal rate of method,
 net present value method,
 profitability index metod 
rate of return method

There are five methods in Capital Budgeting, those are 
following
While the NPV is the rule that always maximise share holder 
value, some firms use other criteria for their capital 
budgeting decisions, such as:

 Net present value

 Internal rate of returrn

 Profitability index

 pay back period 

 Return on book value

in some cases, the investment decisions resulting from the 
IRR and profitability index methods agree with those of 
NPV. Decision made using the pay back period and return on 
book value methods usually are suboptimal from the stand 
point of maximising share holder value.

capital budgeting id process of invoving the long term 
investment projects , it involves the management decision 
so that the mgt analyse the methods of capital budgeting.
 the five types of methods here;
 they con diveded in to two catagerys
 1 , traditional method: ARR, PBP
 2 , discounting method: NPV,PI,IRR