Porter Automotive has three divisions. The CFO requested that each division submit its capital budgeting proposals for next year. These proposals represent positive net present value projects that fall within the long-range plans of the firm. The requests from the divisions are $3.3 million, $4.7 million, and $5.1 million. For the firm as a whole, management has limited spending to $10 million for new projects next year even though the firm could afford additional investments. This is an example of:

Multiple Choice

scenario analysis.

an operating leverage application.

soft rationing.

hard rationing.

sensitivity analysis.