The decision about the investment in new machinery is called_______.

Option 1 -> Working Capital decision relates to managing short-term assets and liabilities like inventory, cash, and receivables, not long-term investments in machinery.

Option 2 -> Capital Budgeting decision involves evaluating and selecting long-term investment projects such as purchasing new machinery, equipment, or building facilities.

Option 3 -> Financial Planning is a broader process that encompasses overall financial strategy and resource allocation across all business activities.

Option 4 -> Capital structure decision concerns determining the optimal mix of debt and equity financing for the company, not asset acquisition.

Hence, Option 2: Capital Budgeting decision -> Investment in new machinery is a long-term capital expenditure decision that requires evaluation of costs, benefits, and returns over multiple years, which is the core focus of capital budgeting -> correct