The First Step in the Capital Budgeting Decision Process Model

question 108

Multiple Choice

The first step in the capital budgeting decision process model is to

• A)Establish assumptions common for each potential capital investment.
• B)Obtain appropriate sources of financing for investments.
• C)Identify potential capital investments that agree with the organization's strategy.
• D)Manage the control of non-quantitative factors.
• E)Analyze the present value of future cash inflow and outflow and relevant qualitative factors.

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Definitions:

Elasticity of Supply

A measure of how much the quantity supplied of a good changes in response to a change in the price of that good.

Price Elasticity

The degree to which the demand for a good is responsive to changes in its price.

Tax Passed

Occurs when the burden of a tax is shifted from the entity legally responsible for it to another party, such as consumers.

Import Quota

A regulatory measure that sets a physical limit on the quantity of goods that can be imported into a country over a specified period of time.