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

Question

Quizplus · Accepted Answer

A capital budgeting or investment decision should only be approved if the expected benefits - such as increased revenues, reduced costs, or enhanced productivity - exceed the costs of acquiring and operating the asset over its useful life. This is typically assessed using various financial metrics, such as net present value (NPV), internal rate of return (IRR), and payback period. If the benefits are worth more to the firm than the cost of the asset, it can be considered a good investment.

A Good Capital Budgeting or Investment Decision Is One in Which