Use the Following Information to Answer the Next Two Questions

question 6

Multiple Choice

Use the following information to answer the next two questions:
A manufacturing firm is deciding whether to invest in a new printer that needs an initial investment of $150,000.This will increase cash flows in the first year by $80,000 and $75,000 in the second year.
-If the cost of capital decreased to 1%,does the firm invest in the new technology?

• A)Yes because the NPV>0
• B)Yes because the NPV=0
• C)Need information on the marginal benefits and costs
• D)No because the NPV<0

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Definitions:

Issue Price

The price at which new securities are offered to the public by the issuer.