Which of the following is the best example of a capital budgeting decision?
A) Deciding which product to emphasise when there are constrained resources
B) Deciding the price of a product for the next six months
C) Forecasting accrual basis profits for the next five years
D) Purchasing a piece of equipment with an expected life of eight years

Question

Quizplus · Accepted Answer

Capital budgeting decisions involve evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization. Purchasing a piece of equipment with an expected life of eight years is a capital budgeting decision because it involves making a long-term investment decision about fixed assets.

Which of the Following Is the Best Example of a Capital