Investment decisions, also known as Capital Budgeting decisions, affect a firm’s earning capacity and must be taken with care. Long-term decisions, such as acquiring a new fixed asset, involve large investments and are often irreversible.
Investment decisions are always reversible.Incorrect Answer
Capital Budgeting affects short-term earnings only.Incorrect Answer
Long-term decisions require careful consideration.Correct Answer
Capital Budgeting involves annual decisions on small investments.Incorrect Answer
Explanation:
Investment decisions, especially long-term, require careful consideration due to their impact.
They involve significant investments and are often irreversible.
Capital Budgeting decisions influence long-term earning capacity, not just short-term earnings.
Proper evaluation is essential to avoid adverse financial impacts.
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By: Parveen Bansal