What's a good way of understanding capital budgeting in finance

1 answer:

3 0

Capital budgeting is a step by step process that businesses use to determine the merits of an investment project. The decision of whether to accept or deny an investment project as a part of a company´s growth initiatives, involves determining the investment rate of return that such a project will generate.

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worty [1.4K]

A multinational corporation will fully benefit from economies of scale when its establish a subsidiary in a new market that can sell products produced elsewhere which allows for increased production and thus possibly greater efficiency.

<h3>What is an economies of scale?</h3>

This refers to a situation whereby the average costs per unit of output decrease with the increase in output being produced by a firm.

Hence, it is agreed that any multinational corporation will be able to fully benefit from economies of scale when its establish a subsidiary in a new market that can sell products produced elsewhere.

Therefore, the Option D is correct.