Capital Budgeting Consists of Two Distinct Processes

question 33

True/False

Capital budgeting consists of two distinct processes. The first is estimation of the cash flows associated with the specific projects being considered, and the second is use of techniques such as NPV and IRR to evaluate those estimates.

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Definitions:

U.S. Government Bonds

Securities issued by the United States Department of the Treasury to finance government spending.

Net Capital Outflow

The difference between a nation's savings and its domestic investments, representing international transfers of capital.

U.S. Assets

Assets located within the United States that may include real estate, stocks, bonds, and other financial instruments owned by individuals, companies, or the government.

Capital Goods

Long-term assets used in the production of other goods and services, such as machinery, buildings, and equipment, essential for creating consumer goods.