What is an Optimal Capital Budget in Capital Budgeting?

1 FINANCE MCQS

The set of projects or investments that maximizes the firm’s value is called ____________?

Minimum capital budget
Optimal capital budget
Maximum capital budget
Greater capital budget

Correct Answer: B. Optimal capital budget

Detailed Explanation

In capital budgeting, the optimal capital budget is the combination of projects that maximizes the overall value of the firm while considering available resources and cost of capital. It ensures that the company selects the most profitable projects without exceeding financial constraints.

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The set of projects or investments that maximizes the firm’s value is called ____________?

The set of projects or investments that maximizes the firm’s value is called ____________?

Detailed Explanation

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In cash flow analysis, two projects are compared using a common life approach, which is classified as…

In capital budgeting, the Internal Rate of Return (IRR) of a project is classified as its ____________?…

In evaluating independent projects, the results of Internal Rate of Return (IRR) and Net Present Value…