The set of projects or set of investments to maximize the firm value is classified as __________?
Correct answer: A. optimal capital budget
- A. optimal capital budget
- B. minimum capital budget
- C. maximum capital budget
- D. greater capital budget
Explanation
An optimal capital budget is the combination of projects or investments that maximizes the firm's value, subject to available funds and investment constraints. The other choices merely describe size and do not express value maximization.
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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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