Investigating the Role of AI in Enhancing Capital Budgeting Decisions with a Computational Perspective

Abstract

The use of artificial intelligence (AI) in financial management, particularly in capital budgeting, has emerged as a transformative technology due to its ability to analyze large and complex datasets. AI can significantly improve the accuracy of forecasts and the management of financial risks. However, its adoption comes with both challenges and opportunities, which are explored in this paper. This study aims to examine the role of AI in enhancing the capital budgeting process and analyze the associated challenges and opportunities. This is a review study based on a comprehensive literature review and case studies from various economic and industrial sectors that have implemented AI technologies. Data were collected through content analysis of relevant academic articles and reports. The findings indicate that AI improves the accuracy and speed of financial decision-making and reduces human errors. Additionally, AI enhances risk management and optimizes resource allocation. However, challenges such as ethical and security concerns and the need for high-quality data for precise analysis remain significant. AI can serve as a powerful tool in the capital budgeting process, but to fully harness its potential, greater attention must be given to addressing technical, ethical, and security-related challenges. Future research should focus on improving transparency in decision-making processes and developing more advanced algorithms.