Tom Jones Is a College Student with No Business Experience

question 35

Multiple Choice

Tom Jones is a college student with no business experience. Jones is most likely to worry about his decision to become a franchisee primarily because of the

• A) restrictions on business operations.
• B) restrictions on company growth.
• C) requirement to work at least 40 hours per week.
• D) increase in entrepreneurial independence.

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Definitions:

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments, calculating the interest rate at which the net present value of all cash flows (both positive and negative) from a project or investment equals zero.

Required Rate of Return

The minimum annual percentage return that an investor expects to achieve when investing in a particular asset or project.

NPV

Net Present Value, a financial metric used to assess the profitability of an investment, calculated as the difference between the present value of cash inflows and outflows.

IRR

Internal Rate of Return is a financial metric used to evaluate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows from a particular project equal to zero.