The idea that a company may be unable to accept all projects that are expected to have positive NPVs due to the lack of funds is known as:

Question

Quizplus · Accepted Answer

Capital rationing refers to the situation where a company has limited funds and hence, it cannot accept all the projects that have positive net present values (NPVs). It is a common scenario in the corporate world where companies have to allocate their scarce resources among different competing projects. On the other hand, capital budgeting is a process of evaluating, selecting and funding long-term investment projects that are expected to generate positive cash flows. Capital constraints and capital structure are other financial concepts that are not directly related to the context of the given question. Cannibalization refers to a situation where a company's new product or service eats into the sales of its existing products or services.

The Idea That a Company May Be Unable to Accept