Typical capital budgeting decisions include ______ decisions.

• A. payroll
• B. tax compliance
• C. auditing
• D. investment

Answer: (D)

Verified step by step guidance

1. Understand the concept of capital budgeting: Capital budgeting refers to the process of evaluating and selecting long-term investment projects that are expected to generate returns over time. It involves decisions about allocating resources to projects such as purchasing equipment, expanding facilities, or launching new products.
2. Identify the types of decisions involved in capital budgeting: Capital budgeting decisions typically focus on investments that impact the company's future financial performance, rather than operational or compliance-related tasks.
3. Eliminate unrelated options: Payroll, tax compliance, and auditing are operational or compliance-related activities and do not fall under the scope of capital budgeting. These activities are more focused on day-to-day operations and regulatory requirements.
4. Focus on investment decisions: Investment decisions are central to capital budgeting because they involve evaluating the profitability and feasibility of long-term projects, such as acquiring assets or funding new ventures.
5. Conclude that investment decisions are the correct answer: Based on the definition and scope of capital budgeting, the correct answer is 'investment,' as it aligns with the purpose of evaluating and selecting long-term projects for the company's growth.