Financing decision, dividend decision and investment decision are the three most important decisions which a firm makes out of those three decisions that are crucial to the continued existence and the survival of any firm, the most delicate and dangerous of them is investment decision. Investment decision otherwise known as capital budgeting decision is the firm’s decision to invest its funds most efficiently in long term assets in anticipation of an expected flow of benefits over a series of years. The nature of capital projects i.e the amount and time involved, recoupment of capital invested etc. Calls for carefulness in decision making on them because any decision made in the wrong direction may have an adverse effect on the organization. This study is undertaken to proffer solution to some of the problems reducing the effectiveness of capital budgeting in an organization. The chi – square test of hypothesis was used to test the statistical validity of data collected in order to validate correct hypothesis or nullify the wrong hypothesis. Data used for this research work was gathered through a well structured questionnaire. I will therefore recommend that the company should always ensure value for money spent.i.e management should be sure that funds are expended for the purpose for which they are appropriated and also ensure managers follow the budget strictly and without any deviation.

TABLE OF CONTENT

Title page i

Certification ii

Dedicationiii

Acknowledgementiv

Abstractv

Table of contentvi

CHAPTER ONE

1.0 Introduction 1

  Background of the study1

1.2 Statement of problem2

1.3 Research questions3

1.4 Objectives of the study3

1.5 Statement of hypothesis4

1.6 Significant of the study5

1.7 Scope of the study5

1.8 Limitation of the study6

1.9 Definition of terms6

CHAPTER TWO

2.1 The capital budgeting definition and philosophy8

2.2 Why capital budgeting investment decisions is important10

2.3 Capital budgeting investment decision11

2.4 Capital budgeting procedure12

2.5 Categories of projects15

2.6 Investment evaluation criteria16

CHAPTER THREE

3.0 Research methodology 30

3.1 Research design30

3.2 Population under study30

3.3 Sample under study/sample size30

3.4 Types and source of data31

3.5 Instrument of data collection31

3.6 Method of data analysis31

CHAPTER FOUR

4.0 Data analysis and presentation of findings 33

4.1 Presentation of findings from interview33

4.2 The organization objectives33

4.3 Hypothesis statement 47

4.4 Hypothesis statement 48

4.5 Discussion of findings48

5.1 Summary50

5.2 Conclusions 50

5.3 Recommendation51

References53

Appendix55