Abstract
American Grain Corporation: When shareholders are about to invest in project, they need to know what the financial consequences of it are. They need to plan the expenses and the possibilities of return on investment, regarding how long it will take to start earning a profit. To choose the project which corresponds to their expectations, shareholders use a method named "capital budgeting". This method is defined by criteria. These criteria could be very different depending on what the shareholders' expectations are. Do they expect short term return on investment or is their plan focused on a long-term basis? The criteria could thus be diverse and would have to be specifically defined. The capital budgeting method takes into account all the possible expenditures. These include the cash outflow as investments in property, plant, equipment, research and development, and advertising campaigning, which are part of the strategy and help to have future inflow. A number of methods are used in capital budgeting.
