Bell Weather Goods has several proposed independent projects that have positive NPVs. However, the firm cannot initiate any of the projects due to a lack of financing. This situation is referred to as:
A) financial rejection.
B) project rejection.
C) soft rationing.
D) marginal rationing.
E) capital rationing.

Question

Quizplus · Accepted Answer

The situation described is known as capital rationing, which occurs when a firm has more positive NPV projects than available funds to invest in them.

Bell Weather Goods Has Several Proposed Independent Projects That Have