A good capital budgeting decision is:
A) one in which the perceived benefits of the project are equal to the cost of the asset.
B) one in which the perceived benefits of the project are less than the cost of the asset.
C) one in which the perceived benefits of the project are more than the cost of the asset.
D) all of the above.

Question

Quizplus · Accepted Answer

A good capital budgeting decision is one in which the perceived benefits of the project are more than the cost of the asset. This ensures that the project will generate positive net cash flows and will add value to the company. Options A and B do not necessarily result in positive net cash flows and may not add value to the company. Option D is incorrect as it includes options that do not result in positive net cash flows.

A Good Capital Budgeting Decision Is