Capital budgeting is the process that businesses use to evaluate potential major investments or projects. It involves analyzing the expected cash flows, costs, and benefits associated with a project to determine its feasibility and profitability. This helps companies decide which projects to pursue and allocate resources effectively. The main goal of capital budgeting is to maximize a company's value by investing in projects that yield the highest returns. Common methods used in this process include Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period. These techniques help assess the financial viability of investments over time.