Capital budgeting decisions are risky because the outcome is uncertain, large amounts are usually involved, the investment involves a long-term commitment, and the decision could be difficult or impossible to reverse.

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Capital budgeting decisions involve significant financial commitments, and the outcome is often uncertain due to various factors such as market volatility, changing economic conditions, and unforeseen risks. Moreover, the investments usually involve a long-term commitment, and reversing the decision may not be possible or could be extremely difficult. As a result, capital budgeting decisions are inherently risky, and managers must carefully evaluate the potential risks and returns before committing significant resources.

Capital Budgeting Decisions Are Risky Because the Outcome Is Uncertain