Which one of the following is a capital budgeting decision?
A) Ascertaining the optimal level of inventory.
B) Determining which bank has the best loan terms.
C) Evaluating the minimal amount of cash which the ﬁrm should keep on hand.
D) Deciding whether or not the ﬁrm should open another retail outlet.
E) Establishing the length of time for which store credit will be offered.

Question

Quizplus · Accepted Answer

Opening another retail outlet would involve a significant investment of capital and thus falls under the category of capital budgeting decision. The other options do not involve the allocation of significant amounts of capital and are more operational decisions.

Which One of the Following Is a Capital Budgeting Decision