The Objective in Solving Capital Rationing Problems Is to ____

question 42

Multiple Choice

The objective in solving capital rationing problems is to ____.

• A) accept all projects with a PI greater than 1.1
• B) maximize the IRR of the projects that are accepted
• C) maximize the NPV of the projects that are accepted
• D) minimize the opportunity cost of the firm's funds

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Definitions:

Profit Centers

Segments or departments within a company that are responsible for generating revenue and are evaluated on their profitability.

Net Income

The remaining income of a firm after deducting every expense and tax from the gross revenue.

Divisional Income

The income generated by a specific division or segment of a larger company, useful for assessing the division's financial performance.

Residual Income

The amount of income that an individual has after all personal debts and expenses, including a mortgage, have been paid.