When McDonald's Comes Up with a New Drink or Sandwich

question 82

Multiple Choice

When McDonald's comes up with a new drink or sandwich for its restaurants, it often markets it in a dozen or so of its outlets before releasing it nationwide. When the company does this, it is engaged in

• A)pretesting.
• B)product launch.
• C)test marketing.
• D)product development.
• E)concept testing.

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Definitions:

Scrap Value

The estimated value that an asset will realize upon its sale at the end of its useful life.

Net Operating Income

The income generated from a company's everyday business operations, excluding taxes and interest.

Discount Rate

The specified interest rate for determining the present value of future cash flows in the context of discounted cash flow studies.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.