Which One of These Is a Capital Budgeting Decision

question 37

Multiple Choice

Which one of these is a capital budgeting decision?

• A) Deciding between issuing stock or debt securities
• B) Deciding whether or not the firm should go public
• C) Deciding if the firm should repurchase some of its outstanding shares
• D) Deciding whether to buy a new machine or repair the old machine

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Definitions:

Balance Sheet

A financial statement that shows the assets, liabilities, and shareholders' equity of a company at a specific point in time, providing a snapshot of its financial condition.

External Financing Needed

The additional funding required by a firm to finance its business activities and growth outside of internal cash flows.

Dividend Payout Ratio

The percentage of a company's earnings paid out to shareholders in the form of dividends.

Profit Margin Ratio

A financial metric that measures the percentage of profit a company produces from its total revenue.