Read the following passage and answer the following questions.

A finance manager in an outlet raised ₹3.5 crore through a mix of debt and equity in a ratio of 4 : 3 to open a new outlet, but the actual amount required was ₹3 crore. The aim of the finance manager is to maximize the shareholder's wealth. Keeping this in mind, he reinvested the excess amount of ₹50 lakh in a fixed deposit carrying 6% interest p.a. while the cost of capital is 10% p.a.

'To open a new outlet' indicates which financial decision?

Long-term investment decision

The correct answer is Option (2) → Long-term investment decision.

'To open a new outlet' indicates a Long-term investment decision.

Opening a new outlet involves committing funds to a project with a long-term horizon, typically involving significant capital expenditure. This decision relates to the allocation of resources to assets or projects that are expected to generate returns over an extended period. Hence, it is classified as a long-term investment decision.