An American Company Has Been Working on a Business Deal

question 6

Multiple Choice

An American company has been working on a business deal in a developing nation. This deal will open an entirely new market to the American company,increase stability in the local economy,and provide jobs to thousands of local workers. When the deal reaches the final phases,the local government asks for a sizable bribe from the American company to move forward with the proper permits to continue with the project. Which of the following is the proper analysis of the situation?

• A)Paying bribes violates U.S. laws,so the deal may fall through.
• B)Reciprocity is illegal in most foreign countries but not necessarily in the U.S.
• C)U.S. bribery laws are suspended in foreign countries,so paying the bribe is acceptable.
• D)According to U.S. laws,bribes are equivalent to gift giving,so they are an accepted aspect of conducting business.
• E)The U.S. firm must consult the International Uniform Code of Business to determine the legality of the bribe.

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Definitions:

Weighted Average Cost of Capital

The expected average yield that a company aims to deliver to its security investors for the purpose of funding its assets.

Debt-Equity Ratio

A proportion indicator of how a company leverages debt and equity to finance its asset base.

Market Values

The market's going price for acquiring or selling a service or asset now.

Book Value

The net value of a company's assets minus its liabilities, often used to assess if a stock is under- or overvalued.