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What is capital rationing? Should a firm practice capital rationing? Why?
Capital rationing is the practice of putting dollar limits on what will be invested in new capital budgeting projects. Private corporations, partnerships and Proprietorships are in a position to do whatever the owners wish. It can be disputed, but, that for a publicly traded corporation capital rationing may not be steady with maximizing the value of the firm. This is because various value adding projects may be rejected if they would cause the firm to go beyond its self imposed capital rationing limit.
Demerits of Pay Back Method:- (i) It ignores the Cash Flows after the Pay Back Period: - The main shortcoming of this method is that it completely ignores all cash inflows subs
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what are the advantages and disadvantages of incremental budgeting?
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The modified duration is a measure of the sensitivity of a bond's price to interest rate changes; the assumption made here is that the expected cash flow does not
I need help solving problems for learning financial management?
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