A major corporation is considering a capital budgeting project that involves the development of a
new technology. The controller estimates the net present value to be negative, yet argues that the
company should invest in the project.
Which of the following statements is MOST correct?
A) The controller should be fired for making such a poor decision.
B) The controller may be considering the option to expand or modify the project in the future.
C) Capital rationing may exist for the current year.
D) The profitability index may be greater than one, giving an accept decision.
B
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