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  3. Foundations of Financial Management Study Set 5
  4. Quiz 12: The Capital Budgeting Decision

If a Firm Is Experiencing No Capital Rationing, It Should

Question 37
Multiple Choice

If a firm is experiencing no capital rationing, it should accept all investment proposals: A) as long as it has available funds. B) that return an amount equal to or greater than the cost of capital. C) that return an amount greater than the cost of equity. D) that are available, regardless of return.

Related questions
Q 38
A characteristic of capital budgeting is: A) a large amount of money is always involved. B) the internal rate of return must be less than the cost of capital. C) the internal rate of return must be greater than the cost of capital. D) the time horizon is at least five years.
Q 39
With non-mutually exclusive projects: A) the payback period will select the best project. B) the net present value method will always select the best project. C) the internal rate of return method will always select the best project. D) the net present value and the internal rate of return methods will always accept or reject the same project.
Q 40
If an old asset sells below book value (UCC) and the asset pool ends, from a tax standpoint: A) there is a decrease in cash flow. B) there is an increase in cash flow. C) there is no effect on cash flow. D) there is a decrease in net present value.
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