Capital Budgeting In The Private Sector (a Case Study Of The Nigerian Breweries)

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Capital budgeting involve basically the estimation of the cash flow, estimation of the expected cash return and application of evaluation techniques in making investment decision.

This study looked into the extent to which the Nigerian breweries do carry out proper evaluation of capital project before making their investment decision as well as the extent in which other factors are consider in the decision process.

The study wills assertion the extent to which capital budgeting evaluation techniques are used by the Nigerian breweries in evaluation the capital budgeted projects. And consider whether well-evaluated project will yield adequate return for investors as well as the other factor, which influence the selection of the project to be invested in.

In arriving at my conclusion, interview were conducted and statistical test such as the chi-square were used in analyzing data collected at the course of the study.

Result of the study show that the evaluation of the capital project by the management of the Nigerian breweries is not normally carried out effectively before making their investment decision and that a well evaluated project will normally yield an adequate return on investment.

Based on the findings, some recommendation has been put forward for consideration in chapter five.



Title page

Approval page




Table of content



1.1 Introductions

1.2 Statement of the problem

1.3 Objective of study

1.4 Significance of study

1.5 Statement of the hypothesis

1.6 Scope of the study

1.8 Definitions of terms



2.0     Review of the related literature

2.1     Meaning of capital budgeting decision

2.2     Importance of capital budgeting decision

2.3     Types pf capital budgeting decision

2.4     Problems

2.5     Analysis of capital project

2.6     Deterring the cash flow

2.7     Techniques used in capital budgeting decision

2.7.1  Payback method

2.7.2 Net present value

2.7.3 Internal rate of return

2.7.4 Accounting rate of return

2.8            Ranking of investment proposal



3.1     Research design and methodology

3.2     Source of data

3.3     Primary

3.4     Secondary data

3.5     Sample used

3.6     Method of investigation



4.1     Data analysis and interpretation

4.2     Data presentation and analysis

4.3     Test of hypothesis




5.1     Summary of the findings

5.2     Conclusion

5.3     Recommendation






Every business firm normally will like to know how it perform over a period of time thus leading to a preparation of profit and loss statement. They also ask about their position at a particular point in time, which lead then to proper balance sheet. Finally they will like to know where they are leading which led to the preparation of budget.

Budgeting is a term that used by long man. Long confused budgeting with planning. a beget is part of a plan. A plan can be expressed in monetary and non-monetary terms. Any plan that is qualified in a monetary term is a budget . a bugeti therefore can be succinctly define as a statement of intention qualified in monetary terms.

In budgeting there are types of budget prepared by frims . such budget include capital budget, sale budget, cash budget and so on. The process of preparing capital budget is called budgeting. Capital budget are long-term budget made for acquisition and expansion of fixed asset. Many firms prepares capital budget today. It was originated in the united state of America (U.S.A) in America it was applied by all firm before the second war. After the second war, many firm saw the need to plan for capital expenditure, hence it is prevalence today.

The Nigerian brewery limited and other beverage are not left out in the train of firm of firm that prepare budget for its capital expenditure. This is however not easy as it is fought with a lot of problem.



The main purpose of setting up a private firm is o archive enough sale revenue that will cover the fixed and the variable cost as well as live some profit top justify its existence. Nigerian brewery limited being a private enterprise involves a brewery beer has the objective of making big huge profit. Brewery all over Nigeria witness heavy rerun on their investment due to the expert of their product to neighboring African countries as well as the high consumption rate of beer in the country. This was before the year 1982.

The introduction of many stringent economic measure after the year 1982 aim at revamping the nations live economic brought with many problem with which the brewery industries is not left out. In the order to produce, firm in the brewery industry (* including the Nigerian brewery limited) acquire fixed asset as well as raw material. This acquisition is abased on the expected demand. The demand for beer cannot now be fairly estimated because of the general rises in the price. General rise in the price of beer has made the consumers to shift their demand to other goods as necessity thud decreasing the demand for beer. The uncertainty surrounding the continuance the rate at which the demand for beer decrease has become of the problem encountered by the capital budget especially by the Nigerian breweries limited since the capacity of production is always affected by change in the demand of the product.

Apart form the capital budgeting problem caused by the uncertainty in the change in the demand, there is also a problem of tariff and import restriction on the importation of fixed asset and the spar parts. The singular problem has help in no small measure in fuelling the height of the problem encountered by the firm. It has also made from like the Nigerian breweries look for alternative way of obtaining fixed asset necessary for its production and operation. Even when this fixed asset are source from the , it often increased the price for them as a result of the import tariff restriction,. The uncertainty surrounding this has made a ca0tial budget problem.


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