The CFO of a firm with three divisions has 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 $$3\mathrm{.}3$ million, $$4\mathrm{.}7$ million, and $$5\mathrm{.}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

sensitivity analysis.

soft rationing.

scenario analysis.

hard rationing.

An operating leverage application