The primary function of the capital budget is to forecast _____.
A) the target payback periods of the projects undertaken by a firm
B) the funds required for future projects
C) the discounted cash inflow from various projects
D) the terminal value of the cash flows from different projects
E) the projects' multiple internal rates of return

Question

Quizplus · Accepted Answer

The primary function of the capital budget is to forecast the funds required for future projects. This involves analyzing the expected cash outflows and inflows of each project to determine the amount of funding needed to invest in them. Payback periods, discounted cash flows, terminal values, and multiple internal rates of return may also be considered in the decision-making process, but they are not the primary function of the capital budget.

The Primary Function of the Capital Budget Is to Forecast