Capital Budgeting is the process of making financial decisions regarding investing in long-term assets for a business. It involves conducting a thorough evaluation of risks and returns before approving or rejecting a prospective investment decision. This process is also known as investment appraisal. Capital budgeting decisions are a part of the overall financial management process for a firm.
Decisions like constructing a new factory, purchasing heavy machinery for production or making a significant investment in an outside business entity are examples of Capital Budgeting. Below is a list of multiple-choice questions and answers on Capital Budgeting to help students understand the importance of this process in a company’s overall decision making. Answer: d Answer: c
Answer: c
Answer: a
Answer: b
Answer: d
Answer: c
Answer: d
Answer: a
Answer: a
Answer: d
Answer: a
Answer: a
Answer: a
Answer: d
Answer: a
Answer: c
Answer: a
Answer: b
Answer: b Also See:
Which of the following is not a typical cash flow?Cash inflows from the sale of property, plant, and equipment is not a typical cash flow under operating activities.
Which of the following is not a typical cash flow under financing activities?The correct choice is (a) Cash outflow for loans made to other entities.
Which of the following is not a typical cash flow related to equipment purchase decisions?Depreciation expense
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What are three capital investment decisions?Capital budgeting is the process by which investors determine the value of a potential investment project. The three most common approaches to project selection are payback period (PB), internal rate of return (IRR), and net present value (NPV).
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