A Characteristic of Capital Budgeting Is

question 68

Multiple Choice

A characteristic of capital budgeting is

• A) a large amount of money is always involved.
• B) the internal rate of return must be less than the cost of capital.
• C) the internal rate of return must be greater than the cost of capital.
• D) the time horizon is at least five years.

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Definitions:

Bond Payable

A long-term debt instrument issued by corporations or governments, obliging the issuer to pay back the principal along with interest at a specified future date.

Financing Activities

Actions leading to alterations in the magnitude and structure of a corporation's equity and debt.

Statement of Cash Flows

An accounting summary that shows the overall cash received by a business from its operational activities and investment income, and the cash expended on its business processes and investment opportunities during a set period.

Cash Payment

The process of settling a debt or completing a purchase with the exchange of physical money or through electronic funds.