Capital budgeting is the process
A) used in sell or process further decisions.
B) of determining how much capital stock to issue.
C) of making capital expenditure decisions.
D) of eliminating unprofitable product lines.

Question

Quizplus · Accepted Answer

Capital budgeting is a process of making investment decisions in long-term assets i.e. capital expenditure decisions such as whether to invest in a new project, purchase new equipment, or expand existing operations. It involves analyzing future cash flows and determining the potential profitability and risks associated with each investment opportunity. Therefore, option C is the correct choice. Option A is incorrect because sell or process further decisions are related to deciding whether to sell a product or process it further, and not necessarily capital budgeting decisions. Option B is incorrect because determining how much capital stock to issue is a financing decision and not a capital budgeting decision. Option D is incorrect because eliminating unprofitable product lines is a strategy for improving profitability, but not necessarily a part of the capital budgeting process.

Capital Budgeting Is the Process