Which of the Following Is an Objective of Capital Budgeting

question 4

Multiple Choice

Which of the following is an objective of capital budgeting?

• A)To eliminate all risk.
• B)To discount all future and past cash flows.
• C)To earn a satisfactory return on investment.
• D)To reverse past decisions.
• E)To reduce the number of investment activities.

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Definitions:

Bond Amortization Schedule

A schedule that details the reduction of a bond's principal amount over time, often including payments of both principal and interest.

Unamortized Premium

The portion of a bond premium that has not yet been amortized or gradually written off over time.

Current Maturities

The portion of long-term debt that is due to be paid within the next year.

Conversion Privileges

Options embedded in financial instruments that allow the holder to change the instrument into another, typically from a bond to stock.