Question

. A firm decides to pay for a small investment project through a $1 million increase in short-term bank loans. This is best described as an example of a(n): A. financing decision. B. investment decision. C. capital budgeting decision. D. capital market decision.

Answer 1

A. financing decision.

Explanation:

The financial decision refers to that decision which reflects the borrowing and fund allocation. It also results in the investment that is paid and expenses held that can increase the shareholder wealth.

It consists of capital structure, working capital management decisions. The capital structure shows a mix of debt and equity whereas the working capital shows the current assets and the current liabilities

According to the given situation, since the small investment project is paid through a $1 million that shows a financing decision