Which one among the following is not a required component of a capital-budgeting decision?Group of answer choicesA decision ruleA numeric measureA benchmarkA scaleNone of the other choices are correct.
Question
Which one among the following is not a required component of a capital-budgeting decision?Group of answer choicesA decision ruleA numeric measureA benchmarkA scaleNone of the other choices are correct.
Solution
The correct answer is "A scale". In capital budgeting decisions, a decision rule, a numeric measure, and a benchmark are all necessary components. A decision rule helps to determine whether or not to accept a project. A numeric measure provides a quantifiable value to assess the profitability or feasibility of a project. A benchmark provides a standard against which the project can be compared. However, a scale is not a required component in capital-budgeting decisions.
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