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CMA Final · Strategic Financial Management · Investment Decisions, Project Planning and Control

In the capital budgeting process, which step normally comes immediately after identifying investment opportunities and preparing project proposals, and before authorisation?

Evaluation and selection of projects using appraisal criteria such as NPV and IRR comes next, before authorisation. Implementation, performance review and post-completion audit follow later, after approval has been given.

  1. APost-completion audit
  2. BEvaluation and selection of projects using appraisal criteriaCorrect
  3. CImplementation of the project
  4. DPerformance review against budget

Explanation

The usual sequence is identification, screening, evaluation and selection, authorisation, implementation, and then review/post-audit. Evaluation using appraisal techniques occurs before approval. Post-completion audit and review occur after implementation.

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