What is capital rationing and what are the investment criterion under capital rationing. a. Capital rationing is when a firm cannot afford to invest in all the projects it may potentially analyze. The criterion for capital rationing is to accept the highest NPV, the highest IRR, the lowest payback period (normal or discount), or the highest profitability index. b. Capital rationing is when a firm can afford to invest in all the projects it may potentially analyze. The criterion for capital rationing is to accept the highest NPV, the highest IRR, the lowest payback period (normal or discount), or the highest profitability index. c. Capital rationing is when a firm cannot afford to invest in all the projects it may potentially analyze. The criterion for capital rationing is to accept the highest NPV, the highest IRR, the lowest payback period (normal or discount), or the lowest profitability index. d. Capital rationing is when a firm cannot afford to invest in all the projects it may potentially analyze. The criterion for capital rationing is to accept the highest NPV, the lowest IRR, the highest payback period (normal or discount), or the highest profitability index