Certified Professional In Financial Management (CPFM)

In the context of capital budgeting, 'capital rationing' refers to a situation where a company:

Has more acceptable projects than it has funds to invest. Can only invest in projects that have an Internal Rate of Return (IRR) above a certain threshold. Chooses to finance all capital projects with debt instead of equity. Rejects all projects with a negative Net Present Value (NPV).

Correct Answer:

Has more acceptable projects than it has funds to invest.

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