easy · Principles of Finance capital-budgeting
Which of the following scenarios best describes 'Capital Rationing' where the use of the profitability index is most critical?
- A firm is choosing between two projects that perform the same function
- A firm is forced to use debt instead of equity to finance a project
- A firm has more positive-NPV projects than it has funds available to invest
- A firm is deciding whether to pay a dividend or reinvest in the business
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