A firm with limited funds for investment in capital assets must ration those funds by allocating them to projects that will maximize share value.

Question

Quizplus · Accepted Answer

This statement is true. When a firm has limited funds for investment in capital assets, it is important for the firm to prioritize projects that will result in the greatest increase in shareholder value. This is because the primary goal of most firms is to maximize shareholder wealth. Therefore, companies must allocate their limited resources in the most efficient way possible to ensure that they are generating value for their shareholders.

A Firm with Limited Funds for Investment in Capital Assets