Question

____ involves selecting projects subject to a funding limitation. a. Capital Financing b. Capital Budgeting c....

____ involves selecting projects subject to a funding limitation.

a.

Capital Financing
b.

Capital Budgeting
c.

Capital Rationing
d.

Cost of Capital
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The Answer is “ C. Capital Rationing “

Capital Rationing can be defined as a situation where a firm / Company / enterprises is not able invest in all the multiple proposed projects due to the limitations of fund. In this case, the firm / company / enterprises select the combination of multiple products which gives the highest profit or the net present value (NPV) from the investments. It happens because of the limitations of funds which they have and therefore, this process can be called as “ Capital Rationing “

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Selecting the project(s) with the highest NPV(s) is not the correct decision rule when: Multiple Choice...
Selecting the project(s) with the highest NPV(s) is not the correct decision rule when: Multiple Choice a. there is capital rationing. b. there are mutually exclusive projects. c. projects are long-lived. d. projects are independent.
1.What is the limitation of using the net present value for evaluating capital investment alternatives? a....
1.What is the limitation of using the net present value for evaluating capital investment alternatives? a. Ignores the time value of money b. Does not consider cash flows c. Cannot be used to compare projects of different size d. All of the above are limitations of the net present value method. 2.Which of the following is NOT part of the capital budgeting process? a.Project identification b.Project evaluation c.Project monitoring d.All of the above are parts of the capital budgeting process.
The technique for incorporating Risk into capital budgeting that involves the use of numbers drawn randomly...
The technique for incorporating Risk into capital budgeting that involves the use of numbers drawn randomly from probability distributions is called a: a. sensitivity analysis. b. scenario analysis. c. probability simulation. d. Monte Carlo simulation.
7)      A company uses the payback method to evaluate capital budgeting projects.  It is currently considering projects A,...
7)      A company uses the payback method to evaluate capital budgeting projects.  It is currently considering projects A, B and C. Project A             Project B              Project C Initial cost (cash outflow)                         $10,000               $10,000               $10,000 Cash inflows: 1st year                                             $  1,000                 $9,000                  $  5,000 2nd year   $9,000                 $1,000                   $5,000 3rd year $15,000       - 0 -                    $35,000 a)      Find the payback period for each of the above capital budgeting projects.  Label the payback period for each project so I can see which payback period goes with which project. b)      What two major weaknesses of the payback method are illustrated by...
Question) The situation a firm faces when it has positive net present value projects but cannot...
Question) The situation a firm faces when it has positive net present value projects but cannot obtain financing for those projects is referred to as:     a.   sensitivity planning.    b.   a contingency situation.    c.   capital rationing.    d.   a discounted cash flow.    e.   a sunk cost situation.
Conduct a comparative analysis of the capital budgeting process for new projects versus replacement decisions. The...
Conduct a comparative analysis of the capital budgeting process for new projects versus replacement decisions. The objective is to maximize shareholder wealth. Question: Explain why the weighted average cost of capital (WACC) is used in capital budgeting.
2Assume that you are a new analyst hired to evaluate the capital budgeting projects of the...
2Assume that you are a new analyst hired to evaluate the capital budgeting projects of the company which is considering investing in two CPEC projects, “Expansion Zone North” and “Expansion Zone East”. The initial cost of each project is Rs. 10,000. Company discount all projects based on WACC. Further, all the projects are equally risky projects and the company uses only debt and common equity for financing these projects. It can borrow unlimited amounts at an interest rate of rd...
A firm’s overall cost of capital is also known as: a. capital budgeting b. capital structure....
A firm’s overall cost of capital is also known as: a. capital budgeting b. capital structure. c. weighted average cost of capital. d. none of the answers is correct. e. capital asset pricing model
Externalities in capital budgeting projects are difficult to quantify and should never be included in financial...
Externalities in capital budgeting projects are difficult to quantify and should never be included in financial analyses. a. True b. False A critical rule in capital budgeting and financial analysis of projects is that decisions must be based on incremental cash flows. a. True b. False A firm’s equity beta is determined by the market and does not reflect business risk. a. True b. False
Please do not use excel to solve problem ​(Capital rationing​) The Cowboy Hat Company of​ Stillwater,...
Please do not use excel to solve problem ​(Capital rationing​) The Cowboy Hat Company of​ Stillwater, Oklahoma, is considering seven capital investment proposals for which the total funds available are limited to a maximum of ​$17 million. The projects are independent and have the costs and profitability indexes associated with them shown in the popup​ window: PROJECT ---- COST ------ PROFITABILITY INDEX A ------------- 4,000,000 ------------- 1.13 B ------------- 2,000,000 ------------- 1.03 C ------------- 6,000,000 ------------- 1.31 D ------------- 5,000,000...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT