Effective Capital Budgeting Techniques for Corporate Growth

Abstract: This research attempts to assess the extent to which economic uncertainty, managerial characteristics, and technological improvements affect capital budgeting techniques' effectiveness, with special emphasis on the integration of traditional and advanced methods. Capital budgeting is the basis of financial decision-making that determines resources allocated to long-term projects. Nevertheless, the traditional methods like Net Present Value (NPV) and Internal Rate Return are generally not able to capture the essence of complexities in the modern business environment. Advanced approaches like Real Options Analysis furnish a more flexible framework for responding to any uncertainty in a dynamic environment. The quantitative research methodology is applied, wherein a survey and a Likert scale questionnaire gather the opinion from 400 finance professionals, including CFOs, investment analysts, and corporate decision-makers across Pune city. Data were analyzed using Multiple Regression and ANOVA to assess the impact of different variables on capital budgeting effectiveness. Results demonstrate that economic uncertainty and managerial characteristics substantially affect capital budgeting decisions, while technological advancements play a critical role in enhancing the effectiveness of capital budgeting techniques. The integration of traditional and advanced methods positively affected corporate growth and financial performance, especially when new financial tools are incorporated within the decision-making framework. Finally, it is concluded that the firms should adopt an integrated approach to capital budgeting by employing both traditional methods and advanced technology for better financial returns. It is further recommended that managerial training and technological investments be made by companies to better empower decision-making within the dynamic business arena. Keywords: Capital Budgeting, Economic Uncertainty, Managerial Characteristics, Technological Advancements, Real Options Analysis