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The capital budgeting process is fundamentally about planning and evaluating investments in long-term assets. This involves analyzing potential investment opportunities to determine whether they are likely to generate a satisfactory return over an extended period. The objective of capital budgeting is to make informed decisions about which projects or investments to pursue, based on their expected cash flows, costs, and benefits.

In this process, businesses assess various factors such as the project's cash flow estimates, the risk associated with the investment, and how it aligns with the company's overall strategic objectives. By evaluating long-term projects, organizations can allocate resources effectively to maximize shareholder value and ensure sustainable growth.

Other options relate to different aspects of financial decision-making. Short-term projects, employee compensation plans, and annual budget allocations do not fall under the capital budgeting umbrella, which is specifically focused on long-term investments in physical or intangible assets that will contribute to a company’s growth and success over time.