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Which of the following statements is correct?
Question 13
Firm M is a mature firm in a mature industry. Its annual net
income and net cash flows are both consistently high and stable.
However, M’s growth prospects are quite limited, so its capital budget is
small relative to its net income. Firm N is a relatively new firm in a new
and growing industry. Its markets and products have not stabilized, so its
annual operating income fluctuates considerably. However, N has
substantial growth opportunities, and its capital budget is expected to be
large relative to its net income for the foreseeable future. Which of the
following statements is correct?
Answer
Question 14
Which of the following statements is correct?