1. Which of the following is NOT an example of a capital budgeting decision? A. Decision to build a new plant B. Decision to renovate an existing facility C. Decision to buy machinery D. All the above are capital budgeting decisions

Question

Business

Reece Bridges

31 December, 06:13

1. Which of the following is NOT an example of a capital budgeting decision? A. Decision to build a new plant B. Decision to renovate an existing facility C. Decision to buy machinery D. All the above are capital budgeting decisions

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Answers (1)

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Ace Sherman · Answer 1

D. All the above are capital budgeting decisions

Explanation:

Capital budgeting is the process of deciding whether or not to spend money on the buying or renovation, improvement or expanding of a fixed asset, or a long term project. In this process it is judged based on the return and the risk whether an investment is worth it.

Deciding to build a new plant is a capital budgeting decision because the company is deciding whether to spend money on a new fixed asset.

Deciding to renovate an existing facility is also a capital budgeting decision because the company is deciding whether to spend money on an existing fixed asset and will it increase returns or not.

Decision to buy machinery is also a capital budgeting decision as the company is deciding whether to buy new fixed assets or not.

So the answer is that all of the above are capital budgeting decisions.