Question

Capital budgeting decisions involve ____________________.

• A. A current outlay followed by a series of benefits over the lifetime of the project
• B. Capital expenditure management, long term investment decision and so on
• C. A current outlay or series of outlays of cash resources in return for an anticipated flow of future benefits
• D. Both (a) and (c)

Answer 1

Answer: (D)

Both (a) and (c)

Capital budgeting involves choosing projects that add value to a company. The capital budgeting process can involve almost anything including acquiring land or purchasing fixed assets like a new truck or machinery. Corporations are typically required, or at least recommended, to undertake those projects which will increase profitability and thus enhance shareholders' wealth.