1. Which of the following best illustrates the problem imposed by capital rationing?
A) Accepting projects with the highest NPVs first
B) Acceptions projects with the highest IRRs first
C) Bypassing projects that have positive NPVs
D) Bypassing projects that have zero IRRs
2. Suppose you borrow $10,000 right now to start a business. If the terms of the loan require you to pay back $16,000 in 5 years, what is the implied annual compound interest rate?
9.86%
10.00%
60.00%
12.00%
None of these