The Key Steps Followed by the Managers in Capital Investment

question 38

Multiple Choice

The key steps followed by the managers in capital investment analysis include all of the following except

• A) identification of capital investment needs
• B) preliminary screening
• C) formal requests for capital investments
• D) sunk costs.

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Definitions:

Supplies

Items used in the day-to-day operations of a business, often consumable in nature, such as office supplies, manufacturing materials, or maintenance necessities.

Equipment

Tangible property used in the operations of a business, such as machinery and tools, which are not intended for sale.

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds, used as a benchmark in lease agreements to calculate the present value of minimum lease payments.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.