ECONOMICS

Detailed explanation-1: -A capital budget lists the projects and investments that a company plans to undertake during the coming year. True. Taking on new projects will impact the company’s revenues and its costs. The break-even level of an input is the level for which the investment has an IRR of zero.

Detailed explanation-2: -It does not include sunk costs.

Detailed explanation-3: -The investment of funds into capital or productive assets, which is what capital budgeting entails, meets all three of the above criteria and therefore is considered a long-term decision.

Detailed explanation-4: -Capital Budgeting is the process of making financial decisions regarding investing in long-term assets for a business. It involves conducting a thorough evaluation of risks and returns before approving or rejecting a prospective investment decision. This process is also known as investment appraisal.

Detailed explanation-5: -Helps in the long term goals of the organization: Capital Budgeting process helps the organization for the long term decision making as well as in making the long term goals as it provides the idea of future costs and growth taking into account the expected future cash flows.