Which One of the Following Statements Is Correct When a Firm

question 69

Multiple Choice

Which one of the following statements is correct when a firm faces hard rationing?

• A) All positive net present value projects will be accepted.
• B) Each division within a firm will be allocated an amount for capital expenditures that will be less than the total value of its positive net present value projects.
• C) The firm does not have funds to finance any new projects.
• D) The firm will fund only those projects that create value for its shareholders.
• E) The firm will only finance the projects which have the highest profitability index values.

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