Which of the following would be considered a capital budgeting decision?
A) Walmart purchases inventory for resale to customers.
B) Apple sells bonds and uses the proceeds to repurchase stock.
C) Goldman Sachs obtains short-term loans to finance day to day operations.
D) Pfizer develops a new therapy and brings it to market.

Question

Quizplus · Accepted Answer

Capital budgeting decisions involve making long-term investments in projects or assets that will generate future cash flows. Developing a new therapy and bringing it to market requires a significant investment of time and money, and the decision to do so would be a capital budgeting decision. Purchasing inventory for resale (A) and obtaining short-term loans for day-to-day operations (C) are typically considered operating decisions. Selling bonds and repurchasing stock (B) is a financing decision.

Which of the Following Would Be Considered a Capital Budgeting