ECONOMICS

Detailed explanation-1: -To evaluate a capital budgeting decision, it is sufficient to determine its consequences for the firm’s earnings. The cash flow effect from a change in Net Working Capital is always equal in size and opposite in sign to the changes in Net Working Capital.

Detailed explanation-2: -Capital budgeting is used by companies to evaluate major projects and investments, such as new plants or equipment. The process involves analyzing a project’s cash inflows and outflows to determine whether the expected return meets a set benchmark.

Detailed explanation-3: -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.

Detailed explanation-4: -Which of the following is true of capital budgeting decisions? They create value for a firm when the value of the selected productive assets is worth more than their cost.