Question

Which of the following is not a capital budgeting decision?

• A. Expansion program.
• B. Merger.
• C. Replacement of an asset.
• D. Inventory level.

Answer 1

Answer: (D)

Inventory level.

Capital Budgeting and investment appraisal, is the planning process used to determine whether an organisation's long term investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are made effectively.

Capital budgeting helps in making the most optimal decisions. It includes expansion programs, merger decisions, replacement decisions but will not comprise of the inventory related decision making.