A firm is having difficulty in getting its clients to submit payment on time. In an effort to promote prompt payment, the firm offers new sales terms of 2/10 net 30. What would the market rate of interest or borrowing rate need to increase to before it is not beneficial for the company to take the discount?

a. 2.04%

b. 2.00%

c. 37.2%

d. 24.83%

What does capital rationing result in?

Select one:

a. It results in all capital expenditure projects being accepted.

b. It results in the company accepting positive NPV projects that will be limited by the amount of capital that is available for investment.

c. It results in all capital budgeting projects with positive NPVs being accepted.

d. It results in project with a positive NPV and higher required rates of return being accepted