Capital budgeting decisions generally:
A) Have long-term effects on a ﬁrm.
B) Are of short-duration.
C) Are easy to revise once implemented.
D) Focus solely on whether or not a particular asset should be purchased.
E) Have minimal effects on a ﬁrm's operations.

Question

Quizplus · Accepted Answer

Capital budgeting decisions have long-term effects on a firm and involve evaluating investment opportunities that typically have a long-term impact on the firm's future cash flows and profitability. These decisions involve significant amounts of capital and have a high degree of risk, making them critical to the success and survival of the firm.

Capital Budgeting Decisions Generally