Answer (D) is correct . Capital budgeting is the process of planning expenditures for investments on which the returns are expected to occur over a period of more than 1 year. Thus, capital budgeting concerns the acquisition or disposal of long-term assets and the financing ramifications of such decisions. The adoption of a new method of allocating nontraceable costs to product lines has no effect on a company’s cash flows, does not concern the acquisition of long-term assets, and is not concerned with financing. Hence, capital budgeting is irrelevant to such a decision.
Answer (A) is incorrect because A new aircraft represents a long-term investment in a capital good.
Answer (B) is incorrect because A major advertising program is a high cost investment with long-term effects.
Answer (C) is incorrect because A star quarterback is a costly asset who is expected to have a substantial effect on the team’s long-term profitability.
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