Relevance Capital Budgeting to
Public Sector in an Organization is the process of analyzing potential
investment for the firm. Capital budgeting decisions are probably the most
important ones financial managers must make. Capital budgeting decisions
usually involves substantial expenditures on new assets. These decisions are
particularly important because the firm loses much of its flexibility by
locking into project and because budgeting decisions define the firm’s
Capital Budgeting in Nigeria local
government is very vital and must be approach with all sense of diligence. The
rate of economic development in the Nigeria local government has been
relatively slow due to continuing whiting down of their powers by the state
government and the state government had continued to encroach upon what would
normally have been exclusive preserves of local government and constantly there
has been a divorce between the people of governments at their most basic
levels. The project is intended to
create awareness in Capital Budgeting in Nigeria Local Government. Also the general reader will find it
educating and informative. The need for
this study arises from the variation in Capital Budgeting in Nigeria Local
Government that has been noticed and this research work hoped to improve the
standard and in order to achieve this, project has gone into so many past works
of authors and related literatures.
This study is divided into five
chapters covering the wide scope of compensation management. Chapter one deals with the general focus of
the study. Chapter two tries to review various
concepts and theoretical strands that are relevant to this study. In chapter three, attempt was made to look
into the methodology of the study.
Chapter four endeavour to present, analyze and summarize the data
collected in the course of the study.
The conclusion of the study is in chapter five where general Summary,
conclusion and recommendations were made.
These were considered relevant to improve the Relevance Capital
Budgeting to Public Sector in an Organization.
In the analysis of the research
work it was concluded that Capital Budgeting has a great impact to public
of Contents vi-vii
1.0 Introduction 1
Statement of the Problem 2
Purpose of the Study 3
Significance of the Study 3
Scope and Limitation of the Study 4
Research Questions 4
Research Hypothesis 4
History of Ikorodu Local government 5
CHAPTER TWO: Literature Review
2.0 Introduction 8
Why and What is Capital Budgeting 10
Conceptual of Capital Budgeting 11
Kinds of Capital Budgeting Proposals 11
Capital Budgeting Decision 13
Capital Budgeting Process 15
The criteria for Investment Decision 16
Impact of Government Decision 22
The Role of L. G. Throughout the Process 22
The Theoretical Issues of Capital
Budgeting Process in Ikorodu L.G 25
2.11.Analysis of the
CHAPTER THREE: Research Method
3.0 Introduction 32
3.1 Research Design 33
3.2 Sources of Data 33
3.3 The Population of the Study 34
3.4 Sample Size 34
3.5 Questionnaire Design 34
3.6 Administering of Questionnaire 36
3.7 Analysis Techniques 36
3.8 Methodology Limitation 37
CHAPTER FOUR: Presentation and Analysis of Data
4.0 Introduction 39
Analysis of Personal Data 39
The relevance of Capital Budgeting 44
Testing and Analysis of Hypothesis 57
Test of Hypothesis 51-56
CHAPTER FIVE: Summary, Conclusion
Summary of the Major Finding 63
TO THE STUDY
term ‘Capital Budgeting’ occupies or plays a strategic or pivotal role in every
organization, be it public owned organizations or privately owned organization.
To this extent, the importance or role of capital budgeting cannot be
undermined because of its importance in financial decision.
Budgeting has been defined in different ways but it means of the same or
relatively the same by different authors, scholars and schools of thought.
to the Institute of Cost and Management Accounting, Capital Budgeting as a
financial and quantitative statement prepared on capital expenditure prior to a
definite period of time of the policy to be pursued for the purpose of
attaining a given objective.
the word of G.C Philipalys ‘Capital Budgeting’ is concerned with allocation of
firm’s care financial resources among the available market opportunities.
his own view, Lynch explained that Capital Budget-ing consists in planning, development
of available capital for the purchase of maximizing the long term profitability
in the concern.
general view, Capital Budgeting involves all the processes in the investment of
resources in the long term projects in anticipation of making profit or
providing essential services to the public acquisition of land, building,
machinery and other capital projects.
often than none, the resources of a nation or society are not allocated to its
component by the market forces or mechanisms (prices) but by the public
decision making means. The principles that guide the allocation of the public
resources ensure the resources are distributed in such a way that the
objectives of the public are accomplished through efficient and effective
OF THE PROBLEM
research work will focus primarily on investigating and point-out the problems
facing public owned organizations for its inability to put in place efficient
allocation of resources, equitable distribution of income by the use of tax and
stabilization of economy by the use of capital budgeting and how it affects
their service delivery to the people, high lost an inadequate capital, poor
human resources, unpredictable social and economic factors bad policy
formulation, sharp practices.
OF THE STUDY
research study will endeavor to show how Public Sector can go about putting its
Capital Budgeting in place to bring desired results to the people. Also, to
contribute to the body of knowledge which will be beneficial to the society at
(1) H0: Capital Budgeting can not
improve allocation of resources through spending and policy implementation.
Capital Budgeting can improve allocation of resources through spending and
(2) H0: Capital Budgeting is not
efficient in distribution of income through tax and benefits.
Capital Budgeting is efficient in distribution of income through tax and
(3) H0: Capital Budgeting can
not stabilize economy by the use of fiscal and monetary policy.
H1: Capital Budgeting
stabilize economy by the use of fiscal and monetary policy.
Capital Budgeting improve allocation of resources through spending and policy
Capital Budgeting at efficient in distribution of income through the tax and
Capital Budgeting stabilize economy by the use of fiscal and monetary policies.
1.6 METHODOLOGY OF DATA COLLECTION
are hand-delivered to the selected local government. Offices for the purpose of the study. This is to ensure that they got to the
respondents. They were been given enough
time, and reminder calls were been made after a while to be able to gather up
every questionnaire with this making up to two weeks duration.
METHOD OF DATA ANALYSIS
The data collected were analyzed using the
descriptive and inferential statistics. The entire copies of questionnaire will
however be collected and analyzed based on simple percentage. The hypotheses formulated above will also be
tested with chi-square statistical technique, which is an estimation of
hypothesis testing, normally used when comprising the observed distribution of
data with the expected distribution.
The chi-square distribution is refereed to as
“goodness of fit text”. Here is the formula below:
X2 = ∑
Fo = Observed Frequency
Fe = Expected frequency
To calculate the expected value, the formula is
also given as:
∑rc = Row
Total x Column total
AND LIMITATION OF THE STUDY
research study will try to point out what is obtainable in the Public Sector in
terms of Capital Budgeting practices. This research work will limit its scope
to capital budgeting in Ikorodu Local Government.
OF IKORODU LOCAL GOVERNMENT
local government is one of the most stable of all local government in terms of
its political boundaries. It has six autonomous communities namely:- Ibeshe,
Igbogbo, Ijede, Ikorodu, Imota and Ipakodo. Ikorodu Local Government is bounded
in the east by Epe local government, south by lagoon in the north by Remo Local
Government of Lagos State, and in west by Shomolu Local Government. The local
government is located at the upland area of the topography has such drainage
within this area is very effective on the slopes and through several rivers
which flow into the stretch of the Ogun-Majidun river valleys is swampy.
are many of this in Ikorodu to start with water transportation is effectively
utilized as more than seventeen communities are accessible by water in the
L.G.A. various water craft ply between Ikorodu and Lagos (Ebute Ero) and even
beyond Epe and Mushin area of Ondo State across the Lagos lagoon. Ikorodu
township has a lighter terminal.