Asked by Laura Resendez on May 22, 2024
Verified
Daniel,a financial manager at Faxeltel Inc.holds a meeting to discuss various aspects of investment in long-lived assets.The meeting takes into consideration the buying of new assets and the replacement of old assets.In the context of financial management,this type of decision making is called
A) capital investment analysis.
B) risk-return trade-off.
C) leveraged buyout analysis.
D) divestiture planning.
Capital Investment Analysis
The process of evaluating the potential returns of an investment in fixed assets or long-term projects versus its costs.
Risk-Return Trade-Off
The principle that potential return rises with an increase in risk.
Leveraged Buyout Analysis
A financial transaction analysis in which a company is purchased using a significant amount of borrowed money to meet the cost of acquisition.
- Understand the importance of financial analysis instruments like capital investment evaluation in the decision-making framework.
Verified Answer
ZA
zayrehan ashleighMay 25, 2024
Final Answer :
A
Explanation :
Capital investment analysis, also known as capital budgeting, involves evaluating the potential investments or expenditures on long-lived assets to determine their worthiness. This includes decisions on acquiring new assets or replacing old ones, exactly what Daniel is doing in the scenario.
Learning Objectives
- Understand the importance of financial analysis instruments like capital investment evaluation in the decision-making framework.