Question

capital rationing and increase in marginal cost of capital are two complications of:

Answer 1

Answer:

The marginal cost of capital rises as the company raises more and more capital. This is because a company can finance a certain portion of new investments by reinvesting earnings and raising enough debt and/or preferred stock to maintain the target capital structure

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Answer 2

Answer:

An increase in marginal cost of capital and capital rationing are two arising complications of optimal capital budget. The optimal capital budget is an amount of investment that allows shareholder value to be maximized..

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