The importance of capital budgeting decisions is due to all of the following factors except for:
A) the impact of a capital budgeting decision is long term;the firm loses some decision-making flexibility when capital projects are purchased.
B) effective capital budgeting can improve the timing of asset acquisition and the quality of assets purchased.
C) the acquisition of fixed assets typically involves substantial expenditures,and before a firm spends a large amount of money,it must have the funds available.
D) capital budgeting techniques overcome the problems with error in forecasts for asset requirements and projected sales,we will still be able to determine if we should fund the project.
E) all of the above are factors that make capital budgeting important.

Question

Quizplus · Accepted Answer

Capital budgeting techniques cannot completely eliminate the risk of forecasting errors, but they can help in assessing the probability of success or failure of a project. Therefore, D is the exception as it overstates the effectiveness of capital budgeting techniques. All other factors listed make capital budgeting decisions important.

The Importance of Capital Budgeting Decisions Is Due to All