An example of a capital budgeting decision is deciding: Multiple Choice 1. how much money should be kept in the checking account. 2. whether or not to purchase a new machine for the production line. 3. how many shares of stock to issue. 4. how to refinance a debt issue that is maturing. how much inventory to keep on hand.

The answer is 2. whether or not to purchase a new machine for the production line

Explanation:

Capital budgeting is the process use for making decisions on capital projects like buying plant and equipment or a new machine. These projects usually last a year or more

Capital budgeting nvolves stages.

It is worthy of note that capital decisions cannot be reversed at a low cost, so mistakes are very costly.

It is usually associated with investment decision.

Option 1 is incorrect because the decision of how much money should be kept in the checking account is an operational decision.

Option 3. is incorrect because this is a financing decision

Option 4 is also a financing decision.

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