Capital budgeting is:
A) the analysis of alternative investment opportunities by a firm.
B) the planning of cash flows for projects that last longer than one year.
C) the planning for the investment of excess capital.
D) the planning for obtaining funds to meet short term cash flow needs.
E) the development of methods for obtaining outside capital for firm expansion.

Question

Quizplus · Accepted Answer

Capital budgeting involves the analysis and evaluation of different investment opportunities to determine which ones are worthy of investment by a firm. It involves assessing the potential cash flows, risks, and returns associated with each investment opportunity to make informed investment decisions. The other options listed (B, C, D, and E) do not fully encompass the scope of capital budgeting.

Capital Budgeting Is