A good capital budgeting decision is one in which the benefits are worth more to the company than the cost of the asset.

Question

Quizplus · Accepted Answer

A good capital budgeting decision should result in a positive net present value (NPV), where the present value of the expected cash inflows from the asset exceeds the present value of the cost of acquiring and maintaining the asset. Therefore, the benefits should be worth more to the company than the cost of the asset to make it a worthwhile investment.

A Good Capital Budgeting Decision Is One in Which the Benefits