ABC Corp Is an Information Technology Company

question 37

Multiple Choice

ABC Corp. is an information technology company. The IT department wants to upgrade the firm's technological infrastructure but the cost of upgrading is likely to take up at least 60 percent of the firm's cash reserves. The finance manager is reluctant to release funds for this purpose. According to him, "The economy is still in a state of uncertainty. The company is better off preserving its cash reserves rather than investing it."
-Which of the following, if true, would most support the IT department's plan to upgrade the firm's technology?

• A) Efficiency gains from the new technology would offset the payments in 10 years.
• B) ABC Corp. has always been ahead of the technology-curve.
• C) The proposed technology is going to be the industry standard in the next year.
• D) The firm has not made any significant investments in the recent past.
• E) Investment in technology is always a gamble-it may or may not pay off.

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Definitions:

Taxation Principle

The guidelines governing how taxes should be levied on individuals and businesses in a fair and efficient manner.

Tax Revenue

The income that is gained by governments through taxation from individuals and businesses.

Economic Income

The total value of all income generated by the assets of an individual or organization, including both realized and unrealized gains.

Net Worth

The total value of an individual's or organization's assets minus their liabilities.