Question

Decisions to install new equipment, replace old equipment, and purchase or construct a new building are examples of
a.sales mix analysis
b.variable cost analysis
c.capital investment analysis
d.absorption cost analysis

Answer 1

Answer:

c.capital investment analysis

Explanation:

Project evaluation that involves decisions on how a company can control its fixed assets are part of  capital investment analysis. It involves making decisions on whether it should install new equipment or replace old equipment, whether to purchase or construct a new building, whether to accept or reject a project, etc. These long term investments should earn a higher return than the cost of acquiring capital in order to be accepted and funded.