Question

Capital budgeting is the process of:

a. keeping track of all the revenues and expenses incurred by a firm during the year.
b. determining how much capital a firm should raise.
c. determining how much debt a firm should budget for in its capital structure.
d. determining which capital investments a firm should make.

Answer 1

determining which capital investments a firm should make.

Step-by-step explanation:

Budgeting is the process by which an individual or a business plan future spending on the various projects they want to accomplish.

Budgeting helps with proper planning and avoids waste.

Capital budgeting is the process of ascertaining if spending on long term investment like new products, research and development, new machinery, and so on is worth it and relevant for the company.

Answer 2

d. determining which capital investments a firm should make.

Step-by-step explanation:

Capital Budgets are prepared to determined which capital investments a firm should make. This takes into account the projected cash flows and discounting them with the firm`s cost of capital to determine the net present value of a capital project.