DVD Heaven Sells New and Used DVDs, Particularly to University

question 66

Short Answer

DVD Heaven sells new and used DVDs, particularly to university and college students in large Canadian cities. It plans to expand its business online, hoping to increase sales by offering a more convenient means of ordering for busy college students.
The president of DVD Heaven has been talking to several other business owners, and now expresses some concerns over developing the e-commerce side of the business. The vice president argues that it is essential for continued growth, but the president argues that there are too many consumer concerns. Which of the following statements, if true, would NOT support the argument being made by the president regarding consumer concerns?
Fraudulent businesses are being set up and run on the internet. Many consumers would rather enter a building that houses a business they know really exists.
Identity theft and the theft of credit card numbers can occur when ordering online.
Privacy can be compromised on the internet, and unethical e-businesses can track or sell sensitive information such as buying patterns.
College students are five times more likely to order over the internet than older adults.
Customers like to see and feel products before ordering them.

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Definitions:

Probability

A measure of the likelihood that a specific event will occur.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.

Cost of Capital

The rate of return that a business must earn on its investment projects to increase or maintain its value, encompassing the cost of debt and equity.

Real Option

The flexibility to make decisions on investments, such as the timing of projects or the expansion of operations, based on the evolution of market conditions.