When a Firm Faces Hard Rationing

question 78

Multiple Choice

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)there will be no available funds for capital expenditures.
• D)the firm will fund only those projects that create value for its shareholders.
• E)the firm will finance only the projects that have the highest profitability index values.

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Definitions:

Theoretical Model

A conceptual framework that represents understanding of complex phenomena, guiding the formulation of hypotheses and the direction of research.

Depression

A common and serious mood disorder that negatively affects how a person feels, thinks, and handles daily activities.

Psychodynamic Theory

A theory of psychology that emphasizes systematic study of the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.

Regression

An ego defense mechanism in which a person returns to a more primitive mode of interacting with the world.