Question

. Capital budgeting decisions involve huge amount of risk due
to
ca) Time factor
b) Money factor
c) Human factor​

Answer 1

Answer:

a) Time factor is your answer.

Explanation:

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Answer 2

Capital budgeting decisions

Explanation:

• A company's formal method for analysing potential large-scale expenditures or investments is known as capital budgeting. It entails deciding whether to invest current cash in fixed assets for the purpose of acquisition, disposition, modification, or replacement. High Risk: Making actions that have a large financial impact on the firm might be risky.
• Affects Future Competitive Strengths: Capital expenditure decisions have an impact on the company's future competitiveness. Sensible investing can help a company become more competitive, whilst a bad investment can lead to collapse.
• The funds that have been invested have an opportunity cost. The degree of risk in capital budgeting projects is related to the project's outcome due to the huge amount of investment and longer time period involved, albeit the amount of risk varies depending on the project.  
• Because of the time factor, the consequences of long-term investment decisions are more broad than those of short-term decisions; capital budgeting decisions are susceptible to a higher level of risk and uncertainty than short-run ones.  
• To use the time value of money to make capital budgeting decisions, a corporation must first estimate all of the project's cash flows, both positive and negative. It then calculates the present value of all of those cash flows, or how much they're worth in today's dollars.

Therefore, the capital budgeting depends on the time factor system.