Final answer:
The purchase and installation of a computer network is included in a capital budget. This budget is designed for long-term investments that benefit a company over multiple years. Different from other budgets, the capital budget reflects significant future-oriented financial decisions.
Step-by-step explanation:
The purchase and installation of an expensive computer network by Carolina Financial Services would be included in a capital budget. A capital budget focuses on investments in long-term assets, such as equipment, machinery, or in this case, a computer network. These expenditures are significant and are expected to generate benefits over multiple years. This differs from a cash budget which deals with the inflow and outflow of cash in the short term, an operating budget which pertains to the regular operations of a company, and an asset budget which may not specifically focus on capital or long-term investments.
Investment expenditure is a critical concept in business finance, covering spending on new capital goods like producer's durable equipment and software, nonresidential structures, and more. Firms often have to decide on the best way to finance these investments, whether by securing funds from early-stage investors, reinvesting profits, borrowing, or selling stock.