Identify the factors affecting Capital Budgeting decision:
(A) Cash flows of the project
(B) Rate of return of the project
(C) Stability of Dividends
(D) State of Capital Market
(E) Investment Criteria involved
Choose the correct answer from the options given below :
(
This question was previously asked in
Shift 05/06/2023 8:30 AM - 10:30 AM
A
(A), (B) and (D) only
B
(A), (B) and (E) only
C
(B), (C) and (D) only
D
(B), (C) and (E) only
Correct Answer
(A), (B) and (E) only
Detailed Explanation
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.
The rate of return: The most important criterion is the rate of return of the project
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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