Question

in capital rationing, alternative proposals are initially screened by establishing minimum standards, using a. net present value and internal rate of return methods. b. contribution margin ratios. c. cash payback and average rate of return methods. d. deferred income tax analysis.

Explanation:

The question is about capital rationing and screening alternative proposals. Capital budgeting techniques like net present value (NPV) and internal rate of return (IRR) are used to evaluate investment proposals, which is relevant to capital rationing. Contribution margin ratios are for cost - volume - profit analysis, cash payback and average rate of return are also capital budgeting but NPV and IRR are more commonly used for initial screening in capital rationing. Deferred income tax analysis is about tax accounting, not capital rationing. So the correct option is a.

Answer:

a. net present value and internal rate of return methods.