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CA Intermediate · Financial Management and Strategic Management · Scope and Objectives of Financial Management

Which of the following is a function of the finance manager under the investment decision rather than the financing or dividend decision?

Selecting capital projects by comparing expected cash flows with the required return is an investment decision. It concerns committing funds to assets. Capital structure mix and issue method are financing decisions, while profit retention versus payout is the dividend decision.

  1. ASelecting capital projects by evaluating expected cash flows against the required returnCorrect
  2. BDetermining the proportion of debt and equity in the capital structure
  3. CDeciding what portion of profit to retain and what to pay as dividend
  4. DChoosing between a rights issue and a public issue to raise funds

Explanation

The investment decision concerns where to commit funds, such as capital budgeting and asset selection. The debt-equity mix and the choice of issue method are financing decisions, and the retention versus payout choice is the dividend decision.

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