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

Question

Quizplus · Accepted Answer

Capital budgeting involves making long-term investment decisions related to the acquisition or expansion of assets with the expectation of generating future cash flows. Purchasing a piece of equipment with an expected life of eight years is a capital budgeting decision as it involves a long-term investment that is expected to generate future cash flows. Options A, B, and D do not involve long-term investments in assets with potential future cash flows.

Which of the Following Is the Best Example of a Capital