The Life Cycle Idea Used to Describe Industries Is Analogous

question 8

Multiple Choice

The life cycle idea used to describe industries is analogous to a living organism that experiences birth, growth, maturity, and death. This comparison

• A) provides clear insight into how organizations change over time.
• B) has some limitations and does not always hold true.
• C) is appropriate because firm rarely experience renewal.
• D) perfectly explains the cereal industry.

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Definitions:

Straight-Line Depreciation

A technique for distributing the expense of a physical asset evenly across its lifespan.

After-Tax Discount Rate

After-tax discount rate is the rate used to determine the present value of future cash flows after considering the effects of taxes.

Working Capital

The difference between a company's current assets and current liabilities, indicating its operational liquidity.

Straight-Line Depreciation

A strategy for allocating the outlay of a tangible asset through its service duration in equivalent yearly installments.