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SAMPLE WORK
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MASOMO MSINGI PUBLISHERS APP – Click to download and access all our materials in soft copies
April 2024 Question One A and C
Summarise FOUR causes of hard capital rationing as used in capital budgeting.
ANSWER
- Causes of hard capital rationing as used in capital budgeting.
- Huge government deficit which will be financed through domestic borrowing thereby exerting an upward pressure on the interest rates
- When capital can be raised at high floatation cost hence making it expensive to raise funds
- When the company is perceived to have a high financial risk by lenders to the extent that they are not ready to grant the company more credit
- A depressed economy where individuals are not ready to purchase securities in the securities exchange
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