A Company Wants to Build a New Factory from Scratch

question 111

Multiple Choice

A company wants to build a new factory from scratch overseas. This is an example of:

• A) franchising.
• B) greenfield venture.
• C) joint venture.
• D) exporting.
• E) licensing.

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Definitions:

Discount Factor

A multiplier used in discounted cash flow (DCF) analysis to calculate the present value of future cash flows, accounting for time value of money.

Salvage Value

The estimated residual value of an asset at the end of its useful life, often considered in depreciation calculations.

Cash Operating Costs

The expenses directly associated with the day-to-day operations of a business, excluding non-cash items like depreciation.

Payback Period

The duration of time it takes for an investment to generate cash flows sufficient to recover its initial cost.