Subject : Corporate Finance Theory

Please provide me answers with details that is based on the corporate finance theories

Q.

The NPV rule suggests that a firm must invest in all positive NPV projects regardless of the cash amount that the firm has. In practice, however, the firms investment amount relies heavily on its financing capacity (e.g., cash holdings or availability of new debt issuance).

Discuss why the firms investment decisions do not follow the NPV rule and are rather influenced by its financing capacity?