What is the purpose of capital budgeting and how does it align to the corporate or finance strategy?

Write a RESPONSE to the classmate’s discussion post below, analyzing their answer and findings. 10 -12 sentences.:

1. What is the purpose of capital budgeting and how does it align to the corporate or finance strategy?

The purpose of capital budgeting to determine which major projects or investments a company should pursue. During this process, the firm is analyzing whether or not the project/investment will provide significant returns compared to the initial cash spent on the project/investment. This type of analysis involves using present value, discounted cash flow, and payback analysis, all of which we are currently learning. The purpose of capital budgeting aligns with ADP’s strategy because ADP’s strategy consists of heavy talk about growth. The firm looks to grow its offering in HCM solutions, HR outsourcing solutions, and global solutions. Essentially, ADP’s strategy aims to continue to innovate and develop new softwares that will make ADP stand out among competitors. Therefore, capital budgeting aligns with the firm’s strategy because capital budgeting is a necessary process in fostering growth and innovation. Big projects and firm-changing investments are the steps that evetnually need to be taken in order to grow the company on a significant scale.

2. What are the expected capital expenditures for your company for this year? What are they investing in capital assets?