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What is the primary assumption underlying capital rationing?
  • a)
    Unlimited availability of funds for all projects.
  • b)
    All projects have the same rate of return.
  • c)
    Restrictions on capital expenditures.
  • d)
    No need for mathematical techniques in decision-making.
Correct answer is option 'C'. Can you explain this answer?
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What is the primary assumption underlying capital rationing?a)Unlimite...
The primary assumption underlying capital rationing is that there are restrictions on capital expenditures, either through internal financing constraints or investment budget restrictions. This assumption acknowledges that companies do not have unlimited funds available to invest in all projects, leading to the need for a selection process.
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