Capital budgeting decisions are generally based on:
A) Tentative predictions of future outcomes.
B) Perfect predictions of future outcomes.
C) Results from past outcomes only.
D) Results from current outcomes only.
E) Speculation of interest rates and economic performance only.

Question

Quizplus · Accepted Answer

Capital budgeting decisions are complex and involve predicting future outcomes to a large extent. However, perfect predictions of future outcomes are impossible, which is why these decisions are made based on tentative predictions of future outcomes. Past outcomes and current outcomes are also considered, but they are not sufficient to make important capital budgeting decisions. Speculation of interest rates and economic performance is also an important factor, but it is not the only basis for making capital budgeting decisions.

Capital Budgeting Decisions Are Generally Based On