Which of the following would NOT be considered a capital budgeting decision? A)

Question

Which of the following would NOT be considered a capital budgeting decision?

A) Walmart purchases inventory for resale to customers.

B) Morgan Stanley installs elevators to comply with the Americans With Disabilities Act.

C) Caterpillar replaces manufacturing equipment with more efficient new equipment.

D) Pfizer develops a new therapy and brings it to market.

109) The equivalent annual cost method is most appropriate in which of the following situations?

In each case, assume that several mutually exclusive options are available.

A) Introducing a new product line

B) Adding another store to a chain of retail stores

C) Installation of federally mandated safety equipment

D) Equipment to reduce production costs

110) If a project has a profitability index greater than 1,

A) the npv will also be positive.

B) the irr will be higher than the required rate of return.

C) the present value of future cash flows will exceed the amount invested in the project.

D) all of the above.

Explanation / Answer

Capital budgeting decisions are made to evaluate the profitability of the project but when an act is done as per enforced law it cannot be viewed as capital budgeting decision.

Hence, Correct option is B) Morgan Stanley installs elevators to comply with the Americans With Disabilities Act.

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