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 identifying and evaluating long-term investment opportunities and selecting those that offer the best return on investment to maximize shareholder value. This involves analyzing cash flows, estimating future returns, and assessing the risks associated with potential investments. Working capital management, financial depreciation, and agency cost analysis are all important financial considerations for a firm, but they do not specifically deal with the long-term investment planning and management process. Capital structure is also relevant to a firm's long-term financial strategy, but it pertains more specifically to the mix of debt and equity financing used to fund the firm's operations and investments.

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