An example of a capital budgeting decision is deciding:
A) how many shares of stock to issue.
B) whether or not to purchase a new machine for the production line.
C) how to refinance a debt issue that is maturing.
D) how much inventory to keep on hand.
E) how much money should be kept in the checking account.

Question

Quizplus · Accepted Answer

Capital budgeting involves making long-term investment decisions that involve significant amounts of money. Purchasing a new machine for the production line is an example of a capital expenditure that would require careful consideration and analysis before making a decision. The other options listed do not involve a long-term investment decision.

An Example of a Capital Budgeting Decision Is Deciding