Question

Characteristics of capital budgeting include: (check all that apply.)

A) Focus on short-term projects
B) Evaluation of investment options
C) Involvement of long-term assets
D) Emphasis on day-to-day expenses
E) Consideration of risk and return
F) Primarily concerned with operational efficiency

Answer 1

Capital budgeting involves the evaluation of investment options, consideration of long-term assets, and the assessment of risk and return.

Step-by-step explanation:

The characteristics of capital budgeting include:

• Evaluation of investment options: Capital budgeting involves carefully evaluating different investment options to determine which ones are most likely to generate positive returns.
• Involvement of long-term assets: Capital budgeting decisions often involve long-term assets, such as machinery or buildings, which will have a significant impact on the company's operations for an extended period.
• Consideration of risk and return: Capital budgeting takes into account both the potential risks and returns associated with different investment projects.