DECA+ Business Management and Administration Practice Exam

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Boost your business management skills with the DECA+ Business Management and Administration Exam. Practice with interactive questions, hints, and detailed explanations. Ace your exam today!

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Which factors are considered in capital investment decisions?

Only the potential for profit
The projects to invest in and how to finance them
Daily operating costs and expenses
Market demand and supply chain logistics

The correct answer is: The projects to invest in and how to finance them

In capital investment decisions, the focus is on both identifying the projects to invest in and determining the best methods of financing those projects. This is crucial because capital investments often involve large outlays of cash for assets that are expected to generate returns over a long period. By evaluating the potential projects, businesses can align their investments with strategic objectives and growth opportunities. Additionally, understanding how to finance these projects—whether through internal funds, loans, or issuing equity—ensures that the business maintains financial health while pursuing its growth and profit goals. Other factors like profit potential, daily operating costs, or market demand do play roles in the larger context of business strategy, but they do not encapsulate the complete scope of what capital investment decisions entail. Focusing solely on profit potential neglects the financial planning necessary to undertake projects, while daily operating costs and supply chain logistics are more related to operational management rather than upfront capital investment considerations.