Read the Paragraph given below carefully and answer the following question. (Q No 5)
Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose the company needs additional Rs.80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was Rs. 8,00,000 and total capital investment was Rs. 1,00,00,000. Instead of issuing 10% Debenture the Company can issue Equity Shares for raising the fund. The financial manager of the company would normally opt for a source which is the cheapest.

What is the other name of long term investment decision?

Capital Budgeting

The other name for a long-term investment decision is: Option 1: Capital Budgeting

Investment decision can be long term or short-term. A long-term investment decision is also called a Capital Budgeting decision.

Here's why:

• Capital budgeting refers to the process of evaluating and making decisions about long-term investments that involve significant financial outlays.
• These investments typically have a payback period that extends beyond one year and can impact the organization's future cash flow and profitability.
• Long-term investment decisions often involve acquiring fixed assets like buildings, equipment, or new technologies. They can also involve investments in research and development, product launches, or expanding into new markets.