What is the the importance of capital investment decisions in a business?

What is the the importance of capital investment decisions in a business?
The following motives will clearly explain why capital budgeting is very important for a firm: 1. Expansion: Capital budgeting is directed towards expansion of the level of operations. It is done through acquisition of fixed assets by purchasing property and plant facilities, which in turn ensure a proper investment and balancing in investment. 2. Replacement: After maturity period when firm's growth slows down, it is required to replace or renew some outdated or worn-out assets, i.e. machinery, equipment, vehicles, etc. Thus a firm can return into its full-fledged production and generate desired benefits. 3. Renewal: As an alternative to replacement, renewal may involve rebuilding, overhauling or retrofitting an existing asset. It certainly increases the productions and profits of a firm. 4. Other importance: There are certain other importances of capital expenditure, which include - a) Plan for securing fundsb) Retain a competitive position in the marketc) Sales and cash forecastd) Sales guaranteee) Comparative study of alternative projects and launching new productsf) Outlays for advertising, research and development, management consulting, etc.