Question

Which one of the following statements concerning capital budgeting is not true? Multiple Choice Capital budgeting uses after-tax cash flows in the analysis of proposed investments. A basic objective underlying capital budgeting is to select assets that will earn a satisfactory return. Because of the existence of advanced forecasting techniques, capital budgeting is based on precise estimates of future events. Capital budgeting is the process of identifying, evaluating, selecting, and controlling long-term investment projects. Capital budgeting involves estimating the revenues and costs of each proposed project, evaluating their merits, and choosing those worthy of investment.

Answer 1

Because of the existence of advanced forecasting techniques, capital budgeting is based on precise estimates of future events.

Step-by-step explanation:

Capital budgeting is the process of identifying, evaluating, selecting, and controlling long-term investment projects and it involves estimating the revenues and costs of each proposed project, evaluating their merits, and choosing those worthy of investment.

Capital budgeting uses after-tax cash flows in the analysis of proposed investments.

Thus, the basic objective underlying capital budgeting is to select assets that will earn a satisfactory return.