Financial Management · Class 12 · CBSE · Commerce Business Studies

A company is evaluating two projects and chooses the one expected to generate returns higher than its cost of capital. Which financial decision is pr…

Practice question from Financial Management (Class 12 · CBSE · Commerce Business Studies), with the correct answer and a step-by-step solution.

easy · MCQ · Q-552B43

A company is evaluating two projects and chooses the one expected to generate returns higher than its cost of capital. Which financial decision is primarily involved?

  1. A.Investment decisionCorrect answer
  2. B.Financing decision
  3. C.Dividend decision
  4. D.Working capital management decision

Solution

The investment decision relates to selecting projects or assets in which the business should invest. The project should be accepted when its expected return is suitably higher than the cost of capital.

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