Purchasing a new machine to replace an existing one is an example of _____.

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Solution

(a) Dividend decision

(b) Working capital decision

(c) Financing decision

(d) Capital budgeting decision

Answer (d) Capital budgeting decision

Explanation: Capital budgeting is utilised by organisations to assess significant activities and ventures, like new plants, equipment, and machinery. The process includes investigating and analysing a venture’s cash inflows and outflows to decide if the normal rate of return meets a set benchmark.

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