Final answer:
The correct statement about capital investment decisions is that the project with the highest net present value may not always be selected, because other factors like risk, strategic alignment, and financial capital sources play a significant role in the decision-making process.
Step-by-step explanation:
When looking at the true statement about capital investment decisions, the correct answer is that the project with the highest net present value (NPV) may not always be selected.
This decision can be affected by a variety of factors beyond just the NPV such as the risk profile of the project, the strategic alignment with the company's goals, and the availability of financial capital from different sources.
Firms can raise the financial capital needed for investment projects from early-stage investors, by reinvesting profits, borrowing, or by selling stock.
They must consider the rate of return and the risk associated with each source of capital. If a particular investment becomes too risky or does not offer a competitive rate of return, firms may opt for alternatives that align better with their financial strategies and risk tolerance.