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Sehaj joined his father's business of Organic masalas, near Baddi in Himachal after completing his MBA. In order to capture a major share of the market, he decided to sell the product in small attractive packages by using the latest packaging technology and machinery. He believed that this project has huge financial potential in terms of sales and cash flows. Father asked Sehaj to prepare a financial blueprint for the organization's future operations. His father suggested that they hire financial consultants to help them with various sources of funds. The consultant enlisted various sources of finance and their associated costs of public issue to determine the optimal source(s) of finance. The consultant also referred to certain guidelines issued by SEBI.

Which financial decision is highlighted in the line, "In order to capture a major share of the market, he decided to sell the product in small attractive packages by using the latest packaging technology and machinery."

Solution

✅ Correct Option: 2

Deciding to acquire the latest packaging technology and machinery involves committing funds to long term fixed assets after evaluating expected sales and cash flows. This is a capital budgeting or investment decision.

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