In Capital Rationing, Alternative Proposals That Survive Initial and Secondary

question 183

Multiple Choice

In capital rationing, alternative proposals that survive initial and secondary screening are normally evaluated in terms of

• A) present value
• B) nonfinancial factors
• C) maximum cost
• D) net cash flow

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Definitions:

Current Stock Price

The most recent price at which a stock was traded on a public exchange.

Required Return

The minimum rate of return on an investment deemed acceptable to an investor, considering its risk level.

Dividends

Disbursements issued by a company to its stockholders, usually originating from the firm's earnings.

Price of The Stock

The current market value at which a single share of a company's stock can be bought or sold.