The Importance of Capital Budgeting Decisions Is Due to All

question 81

Multiple Choice

The importance of capital budgeting decisions is due to all of the following factors except for:

• A)the impact of a capital budgeting decision is long term; the firm looses some decision-making flexibility when capital projects are purchased.
• B)effective capital budgeting can improve the timing of asset acquisition and the quality of assets purchased.
• C)the acquisition of fixed assets typically involves substantial expenditures, and before a firm spends a large amount of money, it must have the funds available.
• D)capital budgeting techniques overcome the problems with error in forecasts for asset requirements and projected sales, we will still be able to determine if we should fund the project.
• E)all of the above are factors that make capital budgeting important.

Differentiate between explicit and implicit costs and their importance in understanding economic and accounting profits.

Recognize the implications of sunk costs in economic decisions.

Understand the application of marginal analysis in "either-or" decisions.

Understand the relationship between marginal costs and production levels.

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Definitions:

Variable-ratio Schedule

A reinforcement schedule in behavioral psychology where a response is rewarded after an unpredictable number of responses, enhancing motivation to respond.

Specified Number

A particular or exact number that has been identified or stated.

Fixed-interval

A timing-based reinforcement plan where rewards are provided following the first response once a set timeframe concludes.

Variable-interval

An unpredictable reinforcement schedule that provides rewards after an unspecified time period following a response.