What is the ultimate goal of the capital budgeting process?
A)To list the projects and investments that a company plans to undertake in the future
B)To determine the effect of the decision to accept or reject a project on the firm's cash flows
C)To forecast the consequences of a list of future projects to the firm
D)To determine how the consequences of making a particular decision affects the firm's revenues and costs

Question

Quizplus · Accepted Answer

The ultimate goal of the capital budgeting process is to determine the effect of the decision to accept or reject a project on the firm's cash flows. This process involves evaluating various potential investments and determining which ones will provide the highest return on investment. By analyzing the cash flows associated with each investment opportunity, the company can make informed decisions that will maximize profitability and shareholder value. The other answer choices are not accurate because they do not reflect the primary objective of the capital budgeting process.

What Is the Ultimate Goal of the Capital Budgeting Process