Which one of the following is a capital budgeting decision? determining how much debt should be borrowed from a particular lender deciding whether or not to open a new store deciding when to repay a long-term debt determining how much inventory to keep on hand determining how much money should be kept in the checking account

Question

Ezekiel Kirk

Business

11 August, 02:55

Which one of the following is a capital budgeting decision? determining how much debt should be borrowed from a particular lender deciding whether or not to open a new store deciding when to repay a long-term debt determining how much inventory to keep on hand determining how much money should be kept in the checking account

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Answers (2)

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Hoffman · Answer 1

determining how much debt should be borrowed from a particular lender

Explanation:

determining how much inventory to keep on hand: this will be part of the purchase budget.

how much money should be kept in the checking account: the minimun cash balance is set on the cash budget

deciding whether or not to open a new store: this will be decided base on more information than just a simple budget. It will require to know the return and financing of the store, and probabilties of outcome among other factors.

deciding when to repay a long-term debt: the company cannot decide when to pay a long-term debt. The dates are defined in the bond or note, chagins those dates incurrs in default.

determining how much debt should be borrowed from a particular lender

On the capital budget the company will decide the debt instrument, the date of payment and the amount of financing. However once set, it cannot undo the bonds or note signed, it will have to keep their word.

Blake Mckee · Answer 2

The correct answer is letter "B": deciding whether or not to open a new store.

Explanation:

Capital budgeting is a planning process used by companies to evaluate which large projects to invest in and how to finance them, It is sometimes known as investment appraisal. The types of projects analyzed by capital budgeting include such major investments like building a new plant, buying new machinery, developing a new product, or buying another company.