Top Management at Lancer Distributing Is Convinced That They Have

question 32

Multiple Choice

Top management at Lancer Distributing is convinced that they have a social responsibility to their community.They believe that they can have the greatest impact in this area through cash contributions to nonprofit organizations.This is an example of corporate:

• A)guilt payments.
• B)philanthropy.
• C)structure and strategy.
• D)short run profit maximization.

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Definitions:

CGT

Capital Gains Tax, a tax on the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale.

Selling New Common Stock

The process whereby a company issues and sells additional shares of its common stock to investors to raise capital.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements and it can also be viewed as the risk-free rate of return plus a risk premium.

Capital Budgeting Projects

Capital budgeting projects are long-term investment decisions made by companies to invest in assets and projects for future growth and profitability.