Capital Budgeting Quiz

What is the primary goal of capital budgeting?

• To increase short-term profits

• To improve employee satisfaction

• To allocate funds for long-term projects

• To reduce operational costs

Which of the following is NOT a method of capital budgeting discussed in the video?

• Discounted Cash Flow

• Payback Analysis

• Throughput Analysis

• Cost-Benefit Analysis

What does the Discounted Cash Flow method primarily focus on?

• Evaluating non-monetary benefits

• Assessing throughput efficiency

• Calculating the payback period

• Estimating future cash flows

How is the payback period calculated in Payback Analysis?

• By dividing the initial investment by the average yearly cash inflow

• By estimating future cash flows

• By calculating the net present value

• By assessing the throughput rate

What does Throughput Analysis assess in capital budgeting?

• The impact of external factors on investment

• The time taken to recover the initial investment

• The efficiency of converting capital into returns

• The rate of return on investment

Which of the following is a limitation of capital budgeting?

• It aligns perfectly with strategic goals

• It is quick and easy to implement

• It guarantees accurate future predictions

• It often ignores external factors

Why is capital budgeting considered time-consuming?

• Due to its reliance on external factors

• Because it focuses on short-term gains

• Due to the need for detailed project evaluations

• Because it involves quick decision-making

What is a potential risk of capital budgeting?

• It always results in financial losses

• It may lead to overly conservative investments

• It guarantees high returns

• It eliminates all investment risks

What is the main purpose of capital budgeting in a business context?

• To ignore market dynamics

• To allocate resources for long-term investments

• To focus on non-monetary benefits

• To make short-term financial decisions

How does capital budgeting help businesses in the long run?

• By reducing employee satisfaction

• By focusing on immediate profits

• By ignoring strategic goals

• By planning for future investments