What is a key decision made by an investment centre?

An investment centre is responsible for making decisions that involve significant resource allocation and capital investment. Choosing between leasing or buying equipment is a fundamental decision that directly impacts the financial performance and capital structure of the investment centre.

This decision involves analyzing the costs and benefits associated with both options, including considerations such as cash flow implications, tax benefits, maintenance responsibilities, and the impact on the centre's overall return on investment. Essentially, it is about optimizing asset utilization and ensuring that the centre's investments align with its strategic objectives.

In contrast, other options involve decisions that may fall under different areas of management responsibility. Setting pay rates for employees typically relates to human resources or payroll management rather than investment decisions. Determining product mix is more aligned with marketing and sales strategy, focusing on product offerings rather than capital investments. Lastly, setting credit terms deals with credit management and accounts receivable policies, which, while still important, do not carry the direct implications for capital investment decisions characteristic of the investment centre's role.