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#cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Capital rationing exists when the company has a fixed amount of funds to invest. If the company has more profitable projects than it has funds for, it must allocate the funds to achieve the maximum shareholder value subject to the funding constraints.
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3. BASIC PRINCIPLES OF CAPITAL BUDGETING
in the second project. Unlimited funds versus capital rationing —An unlimited funds environment assumes that the company can raise the funds it wants for all profitable projects simply by paying the required rate of return. <span>Capital rationing exists when the company has a fixed amount of funds to invest. If the company has more profitable projects than it has funds for, it must allocate the funds to achieve the maximum shareholder value subject to the funding constraints. <span><body><html>


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