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?
- A.Investment decisionCorrect answer
- B.Financing decision
- C.Dividend decision
- 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.
More from Financial Management
- Which objective of financial management is considered superior because it considers both the return and the risk associated with business d…
- A company is considering raising a larger proportion of its funds through debt. Its expected return on investment is higher than the intere…
- Explain how investment, financing and dividend decisions are interrelated in financial management.
- Which statement best describes the purpose of financial planning in a business?
Practise more Business Studies
Sign up free for adaptive practice on this chapter, with instant feedback and hints on every question.
Start practising freeFree to start · No credit card needed