Asked by Jessica Ventura on Jun 01, 2024
Verified
A capital expenditure project becomes desirable when the value of the cash flow generated by the project exceeds the project's cost.
Capital Expenditure
Resources utilized by an organization for the purpose of purchasing, improving, and preserving tangible assets like land, factories, or machinery.
Cash Flow
The sum of monetary movements into and from a business, critically defining its liquid cash assets.
- Identify the criteria for capital expenditure project acceptance.
Verified Answer
ZK
Zybrea KnightJun 06, 2024
Final Answer :
True
Explanation :
A capital expenditure project is considered desirable when the present value of the cash flows it generates is greater than the initial cost of the project, indicating a positive return on investment.
Learning Objectives
- Identify the criteria for capital expenditure project acceptance.
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