Answer to Question #324299 in Economics for Bea

Question

Kabelo and Hendrik are joint owners of Fitness Gym. They are currently investigating the option of investing in cryotherapy, a cold therapy that may reduce inflammation in tendons or joints. Their investment would provide Fitness Gym members with equipment which may be used to reduce post-exercise recovery times, at an additional cost. The addition of cryotherapy to the gym represents a strategic service for Fitness Gym. Which one of the following statements reflect the importance of capital-investment projects such as the example above?

Select one:

a.

The relative magnitude of the amounts involved.

b.

The short-term nature of capital-investment decisions.

c.

The operational nature of capital-investment projects.

d.

The direct effect of the time value of money on capital-investment projects.

Answer 1

Capital investment is the expenditure of money to fund a company's long-term growth. The term often refers to a company's acquisition of permanent fixed assets such as real estate and equipment.

So, the correct answer is c.