Sometimes there is not enough money available from the capital markets. Or, the capital markets may disagree with the company over the desirability of the project. The company can then apply capital rationing techniques. These usually employ the Profitability Index together with NPV analysis, and the Cost-Benefit Ratio. The top ranking projects will be selected until the funds are exhausted.
Attention has to be paid to mutually exclusive projects and project interdependence.
Some of these foregone projects may be more valuable than the company's current projects. One way of reducing this opportunity cost is for the firm to abandon less profitable current operations and use the sale or salvage proceeds to increase its capital budget so that it can undertake more attractive new investments. Therefore, when a company engages in capital rationing, it is even more important that the company review its current investments periodically to see if it could profit from their abandonment.