Which of the following is NOT true when a firm faces capital budget constraints?

Question

Quizplus · Accepted Answer

When a firm faces capital budget constraints, it may have to ration its investment capital among available investment projects. This means that independent projects that generate positive NPVs may not be accepted, which is true for option B. Capital rationing prevails in such a situation, which is true for option A. However, not all the projects listed on its investment opportunity schedule until the IRR equals its WACC will be accepted. This idea assumes that the firm has unlimited capital, which is not the case when capital budget constraints are present. Therefore, option D is not true.

Which of the Following Is NOT True When a Firm