Question

How is capital budgeting defined?

a.

"The firm's decision to invest its current assets most efficiently and effectively in short-term projects for good ROI"

b.

"The firm's decision to invest its long-term projects with the objective of earning good Return on Investment (ROI)"

c.

"The firm's decision to invest its current assets most efficiently and effectively in both short-term and long-term projects"

d.

"The firm's decision to invest its financial assets most efficiently and effectively in long-term projects for good ROI"

Answer: (b)."The firm's decision to invest its long-term projects with the objective of earning good Return on Investment (ROI)" Explanation:The definition of capital budgeting is: "The firm's decision to invest its current assets most efficiently and effectively in the long-term projects and activities with the objective of earning good Return on Investment (ROI)."

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