​Use the Following Setup for the Next Question

question 76

Multiple Choice

​Use the following setup for the next question.
A publisher is deciding whether or not to invest in a new printer.The printer would cost $900,and would increase the cash flows in year 1 by $500 and in year 3 by $800.Cash flows do not change in year 2.If the interest rate is 12%
-​If the interest rate rises to 25% would the investment still take place?

• A)​Yes since NPV>0
• B)No since NPV<0
• C)Yes since the present value of the cash flows is greater than zero
• D)​No since the present value of the cash flows is lesser than zero

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Definitions:

Telecommunications Companies

Businesses that provide services in communication over long distances through phones, internet, cable, and other technologies.

Prematurely Recognize

Recording revenue or expenses in financial statements before the criteria for such recognition are fully met.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is used internationally.

U.S.GAAP

United States Generally Accepted Accounting Principles, which is a framework of accounting standards, principles, and procedures used in the U.S.