Nu Tek Is Comprised of Four Separate Operating Divisions

question 28

Multiple Choice

Nu Tek is comprised of four separate operating divisions.For this year,the firm has decided to allocate capital funds using a soft rationing approach.Which one of the following applies to this situation?

• A)Division managers will be limited to accepting a single new project each.
• B)Division managers are being given blanket approval to accept all positive net present value projects.
• C)Divisions managers will vie with each other for additional capital allocations.
• D)Division managers will not receive any funding for new projects but will be allowed to expand current operations.
• E)Division managers will not receive capital funding for any project.

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Definitions:

Bankruptcy

A legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title 11 of the United States Code (the Bankruptcy Code).

Superior Rights

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After-Acquired Property Clause

A provision in a legal agreement that allows a creditor to claim ownership of assets acquired by the debtor after the signing of the agreement.

Financing Statement

A document filed to give public notice that a lender has a security interest in a debtor's assets, typically used in secured transactions.