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14 April, 15:52

Which one of the following best illustrates the problem imposed by capital rationing? Group of answer choicesAccepting projects with the highest NPVs firstBypassing projects that have zero IRRsBypassing projects that have positive NPVsAccepting projects with the highest IRRs first

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  1. 14 April, 17:39
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    Bypassing projects that have positive NPVs

    Explanation:

    An organization cannot undertake every investment that comes its way due to financial constraints. Capital rationing is the process by which the organization accepts those investments that give maximum benefits at minimum cost and rejects the ones that are not cost effective.

    One of the disadvantages of capital rationing is that it bypasses investments with positive NPV (net present value) and accepts investments with highest NPV.
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Home » Business » Which one of the following best illustrates the problem imposed by capital rationing? Group of answer choicesAccepting projects with the highest NPVs firstBypassing projects that have zero IRRsBypassing projects that have positive NPVsAccepting
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