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The board of OKN is considering an investment opportunity that will require the company to...

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The board of OKN is considering an investment opportunity that will require the company to borrow a large amount in month 10 of the current financial year and to invest it immediately in property, plant and equipment. This investment has a positive net present value that justifies the risk, but the directors are reluctant to invest in the project.

Why might the directors be reluctant?

A.

The return on capital employed for the year will be reduced if the investment is made.

B.

The return on capital employed for the year will be increased if the investment is made.

C.

The year's profit will be depressed by the amount of the investment.

D.

Future profits will be depressed.

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