Because stockholders are very concerned with the "bottom-line" net income that the firm generates, capital budgeting decisions should be based on the accounting income a project generates.

Question

Quizplus · Accepted Answer

Capital budgeting decisions should not solely be based on accounting income as it does not fully reflect the cash flows and timing of the project's costs and benefits. Cash flows and their timing should be the primary basis for these decisions.

Because Stockholders Are Very Concerned with the "Bottom-Line" Net Income