1.1

a. The development of a microprocessor is a capital budgeting decision. The investment of $1 billion will purchase a real asset, the microprocessor design and production facilities.

b. The bank loan is a financing decision. This is how Volkswagen will raise money for its investment.

c. Capital budgeting.

d. Capital budgeting. The marketing campaign should generate a real, though intangible, asset.

e. Both. The acquisition is an investment decision. The decision to issue shares is a financing decision.