Solution
Option 1 -> Capital Budgeting is the process of evaluating and selecting long-term investment projects by analyzing their expected cash flows, risks, and returns.
Option 2 -> Working capital management focuses on managing short-term assets and liabilities for day-to-day operations, not long-term investments.
Option 3 -> Dividend decisions determine how much profit to distribute to shareholders versus reinvesting in the business, not evaluating project viability.
Option 4 -> Financial leverage relates to the use of debt in capital structure and financing decisions, not investment project evaluation.
Hence, Option 1: Capital Budgeting -> This process specifically uses techniques like NPV, IRR, and payback period to assess whether long-term investment projects (such as new plants, equipment, or expansion projects) are financially viable and will add value to the company -> correct