In many textbooks, capital budgeting activity is explained as a process, consisting of a number of stages. Megginson et al. (2010) briefly explain this process in three basic steps, all of which are critical in the process:

1. Identifying potential investments,
2. Analyzing the set of investment opportunities, isolating those that will create shareholder value, and prioritizing them if necessary,
3. Implementing and monitoring the investment projects selected.

The correct answer is C.