Which of the following factor will affect Capital Budgeting Decision?
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Shift 01/06/2023 8:30 AM - 11:30 AM
Correct Answer
Detailed Explanation
FACTORS AFFECTING CAPITAL BUDGETING DECISION
(a) Cash flows of the project: When a company takes an investment decision involving huge amount it expects to generate some cash flows over a period. These cash flows are in the form of a series of cash receipts and payments over the life of an investment.
(b) The rate of return: The most important criterion is the rate of return of the project. These calculations are based on the expected returns from each proposal and the assessment of the risk involved.
(d) The investment criteria involved: The decision to invest in a particular project involves a number of calculations regarding the amount of investment, interest rate, cash flows and rate of return.
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