What does capital budgeting refer to quizlet? (2024)

What does capital budgeting refer to quizlet?

Capital Budgeting. The process of evaluating and selecting long-term investments that are consistent with the firm's goal of maximizing owners' wealth. Capital Expenditure. an outlay of funds by the firm that is expected to produce benefits over a period of time greater than 1 year.

What does the capital budget refer to?

A capital budget is a long-term plan that outlines the financial demands of an investment, development, or major purchase. As opposed to an operational budget that tracks revenue and expenses, a capital budget must be prepared to analyze whether or not the long-term endeavor will be profitable.

What does the term capital budgeting refer to?

Capital Budgeting. is the decision area of financial management that establishes criteria for investing resources in long term projects.

What is a capital budget quizlet?

Capital budgeting is the process of planning and evaluating expenditures of assets whose cash flows are expected to extend beyond one year. Capital refers to fixed assets used in a firm's production process, and budget is the plan that details the project's cash inflows and outflows into the future.

What can capital budgeting be referred to as?

The capital budgeting process is also known as investment appraisal.

What is capital budgeting primarily concerned with quizlet?

What is capital budgeting primarily concerned with? Evaluating investment alternatives.

What is capital budgeting primarily concerned with?

Capital budgeting is primarily concerned with sizable investments in long-term assets. The investment decision is not confined to the acquisition of real assets. It also includes the acquisition of assets through takeovers and mergers.

What is an example of a capital budget?

What is an example of capital budgeting? One example of capital budgeting is analyzing if a technology upgrade is a good investment for the company. Most capital budgeting decisions pertain to projects that have huge money outlay and require a time period before the initial outlay can be recouped.

Which of the following is an objective of capital budgeting quizlet?

Answer and Explanation: One of the objectives of capital budgeting is to earn a satisfactory return on investment.

Which of the following is not a capital budgeting approach quizlet?

Which of the following is not a capital budgeting method? The net present value method (npv).

Which of the following rules is correct for capital budgeting analysis quizlet?

Which of the following rules is CORRECT for capital budgeting analysis? Only incremental cash flows, which are the cash flows that would result if a project is accepted, are relevant when making accept/reject decisions for capital budgeting projects.

Which is not true about capital budgeting?

It includes opportunity cost, actual cost, incremental and relevant cash flows. It does not include sunk costs.

Which of the following is not used in capital budgeting?

Accrual principle is not followed in capital budgeting.

Which of the following expenses is often ignored when making capital budgeting decisions?

Inflation is an economic concept that measures the general increase in prices and the resulting decline in the purchasing value of money over a period of time. Inflation typically occurs gradually over a long period of time, so it is often ignored in capital budgeting decisions.

Is capital budgeting also known as investment appraisal?

Capital budgeting is crucial because it forces business leaders to make educated guesses about whether their significant investments will generate sufficient returns. The process is also known by the term investment appraisal.

What are the four types of capital budgeting?

Is capital budgeting also known as capital expenditure?

The investment decisions of a firm are generally known as capital budgeting or capital expenditure decisions. Capital budgeting decision may be defined as the firm's decision to invest its funds in the long term assets in anticipation of an expected flow of benefits over a number of years.

How can the capital budgeting decision process be described as?

The capital budgeting decision process can be described as how a firm's day-to-day financial matters should be managed. how a firm should finance its assets. which productive assets a firm should purchase.

What two methods are used most often in capital budgeting?

The most commonly used methods for capital budgeting are the payback period, the net present value and an evaluation of the internal rate of return.

What are the 3 methods that companies use to make capital budgeting decisions?

What are the most commonly used capital budgeting methods?

What are the 7 capital budgeting techniques?

What major steps are involved in the capital budgeting process?

What are the phases of capital budgeting?

Quick Summary. Capital budgeting involves evaluating investments for maximum returns. The process includes selecting profitable projects, controlling capital expenditure, finding funding sources, and reviewing investment performance.

What is the first step of capital budgeting?

#1 – To Identify Investment Opportunities

The first step is to explore the available investment opportunities. Next, the organization's capital budgeting committee must identify the expected sales shortly. After that, they recognize the investment opportunities keeping in mind the sales target set up by them.