This paper examines a capital budgeting problem in which a series of limited annual budgets is allocated and a portion of annual savings generated by a project may or may not be used as an additional capital investment. Specifically, a plastic injection machine selection and part assignment problem is investigated under such an annual budget constraint. The problem is mathematically formulated and solved to determine a set of optimal recommendations that include the injection machine sizes to be purchased, pan items to be assigned to them, and timing of purchase so that the net present value of the total net savings is maximized. The results are compared with those obtained when the annual budget constraint is removed.