Firm M is a mature firm in a mature industry. Its annual netincome and net cash

Firm M is a mature firm in a mature industry. Its annual netincome and net cash flows are both consistently high and stable.However Ms growth prospects are quite limited so its capitalbudget is small relative to its net income. Firm N is a relativelynew firm in a new and growing industry. Its markets and productshave not stabilized so its annual operating income fluctuatesconsiderably. However N has substantial growth opportunities andits capital budget is expected to be large relative to its netincome for the foreseeable future. Which of the followingstatements is correct?