Question

Which of the following affects capital budgeting decision?

• A. Rate of Return
• B. Cash Flow of the Project
• C. Investment Criteria and interest rate
• D. All of these

Answer 1

The correct option is D All of these

These decisions are based on expected rate of return and risks involved from each proposal When a proposal involves huge cash flow in return it expects to generate cash flows Capital budgeting techniques are applied to each proposal before selecting a particular project. Amount of investment, interest rate etc should keep in mind.