The You Look Marvelous! cosmetic company is considering building a new shampoo factory.Its accountants and board of directors meet and decide that it is not a good idea to build the factory.If interest rates fall after the meeting
A)the present value of the factory rises.It's more likely the company will build the factory.
B)the present value of the factory rises.It's less likely the company will build the factory.
C)the present value of the factory falls.It's more likely the company will build the factory.
D)the present value of the factory falls.It's less likely the company will build the factory.

Question

Quizplus · Accepted Answer

When interest rates fall, the present value of future cash flows from the factory increases, making it more financially attractive to build the factory.

The You Look Marvelous! Cosmetic Company Is Considering Building a New