The capital budget is used to evaluate:

A Short-term expenses

B Long-term investment decisions and major capital expenditure projects

C Monthly payroll

D Inventory purchases

✓ Correct Answer: Option B

Capital budgeting evaluates whether long-term investments (equipment, projects) will create value.

💡 Why is B) the correct answer?

The correct answer to the question "The capital budget is used to evaluate:" is Option B: Long-term investment decisions and major capital expenditure projects.

The other options — A) Short-term expenses, C) Monthly payroll, D) Inventory purchases — are incorrect for this CFA Exam Prep question. As explained above: Capital budgeting evaluates whether long-term investments (equipment, projects) will create value.

📚 About This CFA Exam Prep Practice Question

This 1-level CFA Exam Prep question from the Corporate Finance topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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The capital budget is used to evaluate:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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