If capital is to be rationed for only the current period, a firm should probably first consider selecting projects by descending order of.
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A. B. C. D.D
When capital is to be rationed for only the current period, a firm should prioritize projects based on their ability to generate cash inflows quickly. Therefore, the most appropriate criterion for selecting projects in this scenario is the payback period.
The payback period measures the time required for a project's cash inflows to equal its initial investment. By ranking projects based on their payback period, a firm can identify those projects that will generate cash inflows quickly and thus allow the company to recoup its investment in the short term.
In contrast, net present value (NPV), internal rate of return (IRR), and profitability index (PI) are all measures of a project's long-term profitability. While these measures are useful for evaluating the overall profitability of a project, they do not take into account the timing of cash flows, which is crucial when capital is rationed for only the current period.
Therefore, selecting projects by descending order of payback period is the most appropriate approach when capital is to be rationed for only the current period.