Which of the Following Is TRUE Regarding Capital Rationing Decisions

question 19

Multiple Choice

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

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

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Definitions:

Linearly

In a manner that follows a straight or direct path or sequence of events.

Exponentially

At a rapidly increasing rate, where the growth rate itself becomes continuously larger.

Information Management

The practice of collecting, storing, managing, and distributing information in an effective and efficient manner.

Patrol

The act of monitoring a specific area or region to maintain order, enforce laws, or provide security, often performed by police or military personnel.