Which one of the following is a capital budgeting decision?
A) Determining how much debt should be borrowed from a particular lender
B) Deciding whether or not to open a new store
C) Deciding when to repay a long-term debt
D) Determining how much inventory to keep on hand
E) Determining how much money should be kept in the checking account

Question

Quizplus · Accepted Answer

A capital budgeting decision involves making a long-term investment decision that impacts the future cash flows of a company. Opening a new store requires investment in fixed assets and will impact future cash flows, therefore, it is a capital budgeting decision. The other options may be related to financing or working capital decisions, but not necessarily a capital budgeting decision.

Which One of the Following Is a Capital Budgeting Decision