Leasing of machinery can be categorized as______a.Capital budgeting decisionb.Investment decisionc.Financing decisiond.Fixed asset
Question
Leasing of machinery can be categorized as______a.Capital budgeting decisionb.Investment decisionc.Financing decisiond.Fixed asset
Solution
The leasing of machinery can be categorized as a Financing decision. This is because when a company decides to lease machinery, it is essentially deciding on a method of financing the acquisition of that machinery. Instead of purchasing the machinery outright (which would be a capital budgeting or investment decision), the company is choosing to make regular payments over a specified period of time. This is a common method of financing for companies that do not have the necessary capital to purchase machinery or other assets outright.
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