Canadian Auto Industries Ltd. (CAI) is considering entering the electric car business because it has access to the latest government research data on a new kind of electric battery. Which of the following situations would most like convince CAI to stop developing a new electric car.
A) The pro forma financial statements indicate CAI must borrow$100,000,000 start the new electric car business.
B) The pro forma financial statements indicate CAI will generate negative cash flows for the first three years of the new electric car business.
C) The pro forma financial statements indicate CAI must make a new investment of $100,000,000 to generate new profits of $3,000,000.
D) The pro forma financial statements indicate CAI's financial position at the end of five years will show a doubling of assets.
E) The pro forma financial statements indicate CAI will show a 50% increase in the amount of debt outstanding.
Correct Answer:
Verified
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