The key strength of capital budgeting lies in its ability to handle tangible:
A) cash flows.
B) investments.
C) benefits.
D) resource allocation.

Question

Quizplus · Accepted Answer

Capital budgeting is a tool used for analyzing investments in long-term tangible assets with cash flows that can be predicted with reasonable accuracy. Therefore, the key strength of capital budgeting lies in its ability to handle tangible cash flows. Option B, investments, and option C, benefits, are too broad and do not provide a clear indication of the strength of capital budgeting. Option D, resource allocation, is a result of the process of capital budgeting and not its key strength.

The Key Strength of Capital Budgeting Lies in Its Ability