Which of the Following Is TRUE Regarding Capital Rationing Decisions

question 72

Multiple Choice

Which of the following is TRUE regarding capital rationing decisions for capital assets?

• A) Companies should always choose the investment with the shortest payback period.
• B) Companies should always choose the investment with the highest net present value.
• C) Companies should always choose the investment with the highest rate of return.
• D) Companies should consider several different methods of evaluation before choosing an investment.

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Definitions:

Beachhead Market

An initial target market that a company focuses on penetrating as a point of entry and a foundation for future growth.

Cross the Chasm

A term derived from Geoffrey A. Moore's book, indicating the challenge startups face in transitioning from early adopters to the broader market.

Early Majority

A group in the technology adoption lifecycle that represents approximately the first 34% of the population to adopt new technology, following innovators and early adopters.

Risk-Tolerant

The degree to which an individual or organization is willing to accept risk, typically in the pursuit of investment gains.