​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:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, giving more weight to some numbers than others.

Self-Constructed Property

Real estate or assets that a company builds for its own use, rather than purchasing or leasing from another entity.

Disclosure Requirements

These are legal or regulatory stipulations that mandate the release of financial and other significant information by a company to its stakeholders.