Divisible project

Divisibility permits a business to undertake part of a project rather than only accept or reject the whole investment. In a simple single-period rationing model, rank independent divisible projects by NPV per unit of scarce investment, then allocate funds until exhausted. The model assumes proportional returns and no minimum operating scale, fixed setup effect or dependency that disrupts scaling. Many practical investments are not fully divisible, so the assumption must be stated. Taking half a project is only meaningful if it can actually provide the corresponding fraction of the expected benefits.