Capital budgeting emphasizes the role of financial information in investment decisions.

Question

Quizplus · Accepted Answer

Capital budgeting is a process of evaluating and selecting long-term investments that will produce positive cash flows in the future. Financial information plays a crucial role in making investment decisions as it enables managers to ascertain the financial feasibility of proposed projects, estimate the expected returns, and compare them with the cost of capital. Therefore, it emphasizes the importance of financial information in investment decisions.

Capital Budgeting Emphasizes the Role of Financial Information in Investment