Answer to Question #201703 in Management for Anathi Tobigunya

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 reflects the importance of capital-investment projects such as the example above?

1 The relative magnitude of the amounts involved.

2 The short-term nature of capital-investment decisions.

3 The operational nature of capital-investment projects.

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

Answer 1

3 The operational nature of capital-investment projects.