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Multiple Choice
Which of the following is NOT typically considered one of the three main types of capital investment decisions?
A
Financing decisions
B
Replacement decisions
C
Expansion decisions
D
Renewal decisions
Verified step by step guidance
1
Understand the concept of capital investment decisions: These are decisions made by businesses to allocate resources for long-term investments. The three main types typically include replacement decisions, expansion decisions, and renewal decisions.
Define each type of capital investment decision: Replacement decisions involve replacing old or obsolete assets, expansion decisions focus on increasing the capacity or scope of operations, and renewal decisions deal with refurbishing or upgrading existing assets.
Recognize that financing decisions are not directly related to capital investment decisions: Financing decisions pertain to how a company raises funds (e.g., debt or equity) to support its operations or investments, rather than the allocation of resources for specific projects.
Compare the options provided in the question: Identify which options align with the definition of capital investment decisions and which do not.
Conclude that 'Financing decisions' is NOT typically considered one of the three main types of capital investment decisions, as it deals with funding rather than investment allocation.