Question

Capital expenditure analysis, which leads to the capital budget, attempts to determine the

impact of a proposed capital expenditure on the organization's:
A. segment margin.
B. contribution margin.
C. ROI.
D. cost of capital.

Answer 1

Capital expenditure analysis evaluates the impact of a proposed expenditure on an organization's ROI and cost of capital. Factors such as profitability and cost of obtaining funds are considered. Option C.

Step-by-step explanation:

Capital expenditure analysis is a process where organizations evaluate the potential impact of a proposed capital expenditure on their financial performance. In this case, the analysis seeks to determine the impact on the organization's ROI (Return on Investment) and cost of capital.

The ROI is a measure of the profitability of an investment, while the cost of capital represents the cost of obtaining funds to finance the capital expenditure. By analyzing these factors, organizations can make informed decisions about whether to proceed with a capital expenditure or explore alternative options.

For example, if a proposed capital expenditure is expected to yield a high ROI and the cost of capital is relatively low, it may be seen as a favorable investment. On the other hand, if the ROI is projected to be low and the cost of capital is high, it may indicate that the investment is not financially viable.

So Option C