Capital Budgeting is a comparison of the costs and benefits of a proposed project to determine whether it is feasible. The benefits of this project are the revenue that the restaurant will generate over time. In most cases, the precise amounts of a project's costs and benefits are not known in advance and can only be estimated.
Capital Budget: A targeted amount of funds to be used for purchasing assets such as buildings, machinery, and equipment that are needed for long-term projects.
Capital expenditures are typically classified into 3 categories: expansion, development and expenses
Why merge? There are several reason why:
Immediate growth: A firm that plans for growth may prefer to achieve its objective immediately through a merger.
Economies of Scale: Growth may also be desirable to reduce the production cost per unit. Manager Expertise: A firm may merge with another to gain access to key managerial talent. Tax Benefits: Firms that incur negative earnings (losses) are sometimes attractive candidates for mergers because of potential tax advantages.
Source:
1. Introduction to Business (2006) by Jeff Madura, (4th ed.). Thomson.
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