The outlay of funds by the firm that is expected to produce benefits over a period of time longer than one year is called capital expenditure. Capital budgeting is the process of evaluating and selecting long-term investments which are consistent with the firm’s main objective of maximizing shareholders’ wealth. Investment consists all kinds of spendings made for acquiring, sustaining, and increasing production factors. Economic profit refers to the risk-adjusted present value of revenue minus all costs, including the opportunity cost of capital. Net income is equal to net earnings (profit) calculated as sales less cost of goods, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes and other expenses. The correct answer is A.