An example of a capital budgeting decision is deciding whether to build your home now or wait until the prices rise. The decision to build now will affect whether you can afford a home in the future.
The concept of constructing a home now is an example of a capital budgeting decision.
If you spend the amount of time building a new home now, then you can afford a home at a reasonable cost. But if you spend the amount of time building a new home now, then you have to raise your prices to accommodate the new home you’re building.
The decision to build a home now also affects the number of units you build and the number of people you can invite. Building a home now also affects the number of units you can build. Buying a home at a discount can be an excellent opportunity to build a home and increase your number of units. But building a new home during a boom market is a horrible way to build your house and cause a housing crisis.
For a new home, you can build it at a discounted price, or you can build it at full price. The choice is up to you. If you build it at full price, then you can get more units than you can build in the first place. If you build it at a discount, then you will only build up to the capacity (number of units) you have. When the new home you build is a complete failure, you will most likely be out a lot of units.
The reason people build expensive houses is people want to feel special, and people want to look good. If you build it at a discount, then you don’t get as many units as you build in the first place. As a result, you don’t get as many units. As a result, you will likely end up with an over-concentrated house that nobody wants to live in.
For example, I have a friend that built a house for her kids when her husband died and left her with a house that was so over-concentrated that it was not livable. I know this because I built the same house and it was a complete failure. She had a lot of guilt and so her house was over-concentrated.
This is another reason why you should never build your house too over-concentrated. It will likely cost a lot more money in the end to make it livable again, but it also means that you will not have the funds to make any renovations to it.
If you build your house over-concentrated, you may end up with a house that is almost impossible to live in. The same as what happened with my dad’s house, where it was so un-concentrated that it was literally unusable. It is so over-concentrated that it is not just a case of money not spending appropriately, but an inability to spend money when you need it.
This is what we call a “capital budgeting” decision. It is a decision on how much you want to spend money on a given project. It is a decision not to spend money you don’t have on that project. We have heard many times that we need to have a “base area” in our budget, so that we can “base our budgeting on that.” But the base area is not the money you spend.
