Jake Is Owner/CEO of a Local Car Wash Business; He

question 39

Multiple Choice

Jake is owner/CEO of a local car wash business; he operates several outlets in the area. To grow his portfolio of business and to take advantage of his expertise, he decides to open a boat detailing business and a window washing business. Based on the given information, Jake is adopting a(n)

• A)concentration strategy.
• B)differentiation strategy.
• C)concentric diversification strategy.
• D)conglomerate diversification strategy.
• E)lateral diversification strategy.

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Definitions:

Net Present Value

A financial metric that estimates the profitability of an investment or project by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Internal Rate of Return

This is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Payback Period

The length of time it takes for an investment to recover its initial expenditure from the cash inflows that it generates.

After-Tax Discount Rate

The rate used to discount future cash flows to their present value, adjusted for the impact of taxes.