When firms do not have sufficient available financing to invest in the positive NPV projects they have identified, __________________ is/are said to exist.
A) Excess financing.
B) Contingency options.
C) Strategic options.
D) Managerial options.
E) Capital rationing.

Question

Quizplus · Accepted Answer

Capital rationing occurs when firms do not have sufficient available financing to invest in the positive NPV (Net Present Value) projects they have identified. This situation forces companies to prioritize and choose among projects due to limited financial resources.

When Firms Do Not Have Sufficient Available Financing to Invest