Bachelor thesis in Business administration, School of Business and Economics at Linnaeus University, Controller, 2FE13E, spring semester 2014 Title: Capital budgeting in Municipal-real estate companies - A study of the law of public housing company impact on capital budgeting. Authors: Axel Erlandsson, Caroline Hellman and Niklas Lundqvist Tutor: Anders Jerreling Background: Municipal owned real estate companies  has in the past been obliged to take responsibility for providing housing to Swedish municipal inhabitants. Municipal owned real estate company’s has in the past been prohibited to act in profit purpose. In January 2011 the previous law of public housing was replaced with the new law on public municipal housing companies. The municipality may not provide the municipal owned company with any financial advantages against a private owned real estate company. A municipal owned real estate company should according to the new law act businesslike and act in the company’s best interest. The purpose of the new law was to establish that municipalities have the right to operate public housing corporation, however it must be done in ways that do not affect market competition, the municipal housing company should compete on equal terms with a privately owned real estate company. The meaning of acting businesslike can be interpreted in several ways.  One approach is that acting business like is equal to require a market rate of economic return. The profit of the company should therefore be the same as what would be required of a private actor in the same market.  The municipal owned real estate company should, if the profit requirement is fulfilled, contribute to society. Another aspect is that acting business like is a wide attitude that non-subsidized companies take regarding investments. The new law is not prohibiting the municipally owned real estate companies to take social responsibility, but the business like behavior must be the company’s superior priority.  The new law sharpens the demands on the municipality as a company owner, they should by law require a market rate of economic return. Purpose: The purpose of our study is to describe and explain how the investment process appear since the new law was established in 2011 and further identify changes in the way company’s act and way of thinking in the capital budgeting process. Method: The essay is based on a qualitative research method with data collection through semi-structured interviews. Three case studies of municipal real estate companies were conducted to identify what effect the new law had on the company’s capital budgeting process. Result and conclusion: The outcome of the three completed case studies varied, but overall it can be said that the largest impact on the effect of the new law is regarding the real estate company’s basic approach to acting businesslike. Two of the three case studies showed an almost absent change in the company’s behavior, they are not acting more businesslike since the new law was established. The third case study demonstrated a change in the company’s behavior, mainly in the initial stage in the capital budgeting process as well as in the decision-making stage. The company makes investments with greater caution, careful calculations are more important and the company has higher requirements on how quickly an investment must generate profit. Concerning the third real estate company had the responsibility for housing policy shifted from the housing company to the municipality.