Which of the following statements is correct?
A) Capital budgeting has long-term effects on firm leading the firm to lose some decision-making flexibility.
B) Because asset expansion is fundamentally related to future sales,the decision to buy an asset involves an implicit sales forecast.
C) Timing is important in capital budgeting.
D) Capital budgeting is important because the acquisition of fixed assets typically involves substantial expenditures.
E) All of the above are correct.

Question

Quizplus · Accepted Answer

A) Capital budgeting involves making long-term decisions on investments, which can have significant effects on a firm's operations and limit decision-making flexibility.
B) When a company purchases an asset, it typically does so with the expectation that the asset will generate future revenue, making sales forecasting implicit in the decision-making process.
C) Timing is an important factor in capital budgeting, as it can affect the cost of capital and future cash flows.
D) Capital budgeting is important because it involves allocating substantial financial resources towards the acquisition of fixed assets, which can have significant long-term effects on a company's financial health.

Which of the Following Statements Is Correct