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Jean Luc and Oscar Own a Small Manufacturing Company in Louisiana

question 3

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Jean Luc and Oscar own a small manufacturing company in Louisiana, and they are meeting with two executives of a Mexican retail chain in the hopes of convincing them to carry their products. Jean Luc begins the pitch, and after a couple of minutes, Oscar jumps in to say, "Jean Luc really hit the nail on the head when he said these products offer better value than what you're currently carrying." The Mexican executives both speak English, but they look at each other in confusion. What mistake did Oscar make?


Definitions:

Uncertainty

A lack of definite knowledge or predictability about outcomes, often factored into decision-making and risk assessments.

Present Value Index

An index computed by dividing the total present value of the net cash flow to be received from a proposed capital investment by the amount to be invested.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of investments.

Capital Investment

Funds invested in a firm or enterprise for the purpose of furthering its business objectives, including purchase of physical goods or investment in projects.

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