The process in which the managers of the company identify projects to add value is classified as __________?
Correct answer: A. capital budgeting
- A. capital budgeting
- B. cost budgeting
- C. book value budgeting
- D. equity budgeting
Explanation
Capital budgeting is the process of evaluating and selecting long-term projects that are expected to add value to the company. Cost, book value, and equity budgeting are not the standard terms for this investment decision process.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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