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Financial & Managerial Accounting
Found in: Page 1083
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Capital budgeting decisions require careful analysis because they are generally the most and decisions that management faces.

Capital budgeting decisions are the most difficult and risky.

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Step by Step Solution

Step-by-Step SolutionStep 1: Definition of capital budgeting

Capital budgeting is defined as the process which analyzes the various long-term investments and decides which assets to acquire or sell.

Step 2: Fill in the blanks

The capital budgeting decisions require careful analysis because they are generally the most difficult and risky decisions that management faces.

They are difficult because they require predicting events that will not occur until well into future

These are risky because:

1. The outcome is uncertain

2. Large amount of money is involved

3. Long-term commitments

4. Difficult or impossible to reverse the decision

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