ABC Corp Is an Information Technology Company

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 finance manager's point of view?

A) There is a correlation between a firm's level of technological investment and its long-term growth.
B) Gains from technology are hard to predict on account of uncertain demand.
C) The returns from other investment opportunities are much more attractive.
D) Recent reports suggest that the economy is yet to fully recover from the recession.
E) Banks are hesitant to lend to the company on account of uncertain economic conditions.