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Capital budgeting decisions usually involve analysis of: A. Cash outflows only B. short term investments only C. Long te…
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Capital budgeting decisions usually involve analysis of:
A. Cash outflows only
B. short term investments only
C. Long term investments
D. Investment with certain outcomes only
E. operating revenues
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2023-03-15T10:00:11+00:00
2023-03-15T10:00:11+00:00 1 Answer
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Capital budgeting decisions usually involve analysis of long-term investments.
Capital budgeting is the process of making investment decisions involving large expenditures of capital over a long time horizon, typically involving several years. These investments are expected to generate cash flows and benefits over a long period of time, which makes it essential to analyze the investment’s long-term potential. Capital budgeting decisions may include investing in new projects, acquiring new assets, or expanding the business.
The analysis typically involves estimating the cash flows associated with the investment, assessing the risks involved, and determining the potential return on investment. Factors such as the initial investment, maintenance costs, and expected revenues or cost savings generated by the investment are all considered in the analysis.
Therefore, capital budgeting decisions usually involve analysis of long-term investments, including both cash outflows and inflows, to determine the expected return on investment.