Practice Meaning and Importance of Capital Budgeting - 25.1 | 25. Capital Budgeting Techniques | Management 1 (Organizational Behaviour/Finance & Accounting)
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25.1 - Meaning and Importance of Capital Budgeting

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is capital budgeting?

💡 Hint: Think about investments that last for a long time.

Question 2

Easy

Why is capital budgeting important?

💡 Hint: Consider how these decisions affect a company’s future.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What does capital budgeting primarily focus on?

  • Short-term gains
  • Long-term investments
  • Daily expenses

💡 Hint: Think about investments that require a lot of planning.

Question 2

True or False: Once a capital budgeting decision is made, it can be easily reversed.

  • True
  • False

💡 Hint: Consider the nature of long-term commitments.

Solve and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A company has to decide between two projects: Project A requires a $1 million investment and promises $250,000 annually for 5 years, while Project B requires $800,000 and promises $200,000 annually for 6 years. Calculate the NPV for both with a 5% discount rate and decide which project is better.

💡 Hint: Consider how each project's cash flow timing affects the outcome.

Question 2

Discuss how a small startup might incorporate risk management into its capital budgeting process. Provide examples of specific strategies.

💡 Hint: Think about how small businesses might limit their financial exposure.

Challenge and get performance evaluation