Question

The capital budgeting process in a company involves evaluation of cash flows, risk analysis, correlation with the portfolio of projects in the company etc. To make this process more streamlined, firms identify whether the projects qualify as a capital budgeting project or not and generally analyze them in different vertical categories. Which of the following are examples of a capital budgeting project? Check all that apply.
a. Fort Worth Cattle Co.’s purchase of its normal stock of raw materials inventory.
b. Atlanta Aeronautics Co.’s purchase of a new piece of equipment.
c. Universal Computer Corp.’s purchase of a competitor’s subsidiary.

Answer 1

Answer:

c. Universal Computer Corp.’s purchase of a competitor’s subsidiary.

b. Atlanta Aeronautics Co.’s purchase of a new piece of equipment.

Explanation:

Consider the following definition.

What is capital Budgeting ? Capital budgeting is the process a business undertakes to evaluate potential major projects or investments.