Capital budgeting decisions are generally based on:
A)Tentative and potentially unreliable predictions of future outcomes.
B)Predictions of future outcomes where risk is eliminated.
C)Results from past outcomes only.
D)Results from current outcomes only.
E)Speculation of interest rates and economic performance only.

Question

Quizplus · Accepted Answer

Capital budgeting decisions involve allocating large amounts of resources for long-term projects that have uncertain outcomes. Therefore, the decisions are based on tentative and potentially unreliable predictions of future outcomes. It is important to minimize risks by using various forecasting techniques and sensitivity analysis.

Capital Budgeting Decisions Are Generally Based On