The process of planning and managing a ﬁrm's long-term investments is called:
A) Working capital management.
B) Financial depreciation.
C) Agency cost analysis.
D) Capital budgeting.
E) Capital structure.

Question

Quizplus · Accepted Answer

Capital budgeting is the process of evaluating and selecting long-term investments that align with the firm's overall strategy and goals. It involves analyzing potential projects or investments, estimating their expected cash flows, considering risks and uncertainties, and determining whether the expected returns justify the cost of capital. Working capital management is focused on short-term asset and liability management, financial depreciation is not a term, agency cost analysis is related to the costs associated with conflicts of interest between management and shareholders, and capital structure is concerned with the mix of debt and equity financing for a company's operations.

The Process of Planning and Managing a ﬁRm's Long-Term Investments