Question

Capital budgeting is the process of doing which of the following? Group of answer choices Making...

Capital budgeting is the process of doing which of the following?

Group of answer choices

Making certain adequate capital is available to pay bills when they come due.

Budgeting for public finance projects.

Identifying, evaluating, and implementing a firm’s investment opportunities.

Allocating capital among bonds and stocks.

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Answer #1

Answer:- Identifying, evaluating, and implementing a firm’s investment opportunities.

Explanation:- Capital budgeting is the process of analyzing cash inflows and outflows of a project to determine whether it is advantageous to undertake the project or not. Ideally, a firm would pursue such opportunities that enhance shareholders value. It is the process of judging whether or not to invest in a particular project / opportunity as all the investment possibilities may not be rewarding. The focus is on project that gives a return more than the cost of financing of such project. So, valuation of a project is done in terms of cost and benefit.

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