Budgeting That Involves Decisions Such as Whether to Buy or Lease

question 13

Multiple Choice

Budgeting that involves decisions such as whether to buy or lease equipment or build a new factory is referred to as:

• A) capital budgeting.
• B) operations budgeting.
• C) facilities planning.
• D) strategic planning.

---

Definitions:

Pretax Cost of Debt

The interest rate a company pays on its debts, before taking taxes into account.

Cost of Equity

This refers to the rate of return that a company is expected to offer investors to compensate for the risk of investing in its equity.

Beta

A measure of a security's volatility in relation to the overall market.

Risk-Free Rate

The theoretical return on investment with no risk of financial loss, often represented by the yield on government bonds.