How does the capital budgeting process begin?
A)by analyzing alternate projects
B)by evaluating the net present value (NPV)of each project's cash flows
C)by compiling a list of potential projects
D)by forecasting the future consequences for the firm of each potential project

Question

Quizplus · Accepted Answer

The capital budgeting process begins with compiling a list of potential projects. This involves identifying and evaluating different investment opportunities that the company may want to pursue in order to achieve its long-term business objectives. Once the list of potential projects has been developed, the firm can then analyze alternate projects, evaluate their net present value, and forecast the future consequences of each potential project. However, the initial step is to create a list of potential projects to consider.

How Does the Capital Budgeting Process Begin