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Capital Budgeting is defined as planning and financing long term investment projects in both the private and public sectors (Skierkowski, 1981). In the literature, there is a great deal of discussion about CB in the public sector (Bradley and Frey, 1979), as well as emphasis in the private sector (Murdick et.al., 1980). This paper concentrates on the private sector since it involves the profitability issue, which is strongly affected by CB decisions; although, many other CB issues are in common for both private and public sector organizations. Therefore, this study presents an integrated approach that can be applied to both profit as well as to non‐profit organizations.