Question

In general terms, a sound capital investment will earn a. back its original capital outlay. b. a return greater than existing capital investments. c. back its original capital outlay by the midpoint of its useful life. d. back its original capital outlay and provide a reasonable return on the original investment. e. None of these choices are correct.

Answer 1

The correct option here is D) .

Step-by-step explanation:

A capital investment which can be defined as an amount which is invested in any project or business opportunity or even an asset, can be said to be sound when it brings back the original capital invested with a reasonable amount of return. So it becomes very important for a manager to assess factors like quantity and timing of cash flow, risk in investment etc before making a capital investment.

Answer 2

The correct answer is option d.

Step-by-step explanation:

Capital investment can be defined as the money spent on a business venture with the expectation of return.

It is also the money spent to acquire fixed assets.

Though it does not include day to day expenditure on working capital.

A capital investment will be regarded as sound if that investment is able to recover its original outlay and provide a reasonable return as well.