What to think of this type of the capital budget decision below?

An example of a capital budget decision would be a transportation company that is looking to expand.The company would need to know how many additional vehicles it will need based off of the current demand.Knowing an estimate of how much the business is expected to earn within a period of time can help them project their earning plus inflation rate as well as the current demand for transportation.

An example of cost of capital would be to buy and renovate a house.I have not personally done this but you see television shows regarding this and I have a few family members that have done this.Some things you must research would be:

*Current market value and the area

*Compare what you expect to sell the house for vs how much you paid for it

*how much will the renovation cost

*how much will you pay for mortgage/insurance until you sell the property

*once house is renovated, how much can you expect to earnvs the market value

To expand a business, the manager will need to cover the cost of the project/expansion.The manager will have to decide if the return on the investment would be more than what they would initially spend to fund it.The return on the capitol will need to be greater.