Capital rationing assumes:

Select one:

A. a limited amount of capital is available.

B. a limited amount of investments are available.

C. maximum profitability will be obtained.

D. B and C.

A firm has net income of $2.0 million and it has 1.0 million shares of common stock outstanding. The shares currently trade for $16 a share. The firm is planning to repurchase 15% of the shares. Assuming that the repurchase will have no effect on either net income or the firm's P/E ratio, what will be its share price following the repurchase?

Select one:

A. $16.00

B. $18.82

C. $32.00

D. $37.65

A firm is considering an investment in a new type of technology. Which of the following factors should the firm include in its decision making process?

Select one:

A. The company has already spent $5 million researching the technology

B. The new technology will affect the cash flows produced by its other operations

C. If the investment is not made, the firm will be able to sell one of its labs for $2 million

D. It should consider both b and c