An Internationally Recognized Brand Name Is an Entrance Barrier to New

question 160

Multiple Choice

An internationally recognized brand name is an entrance barrier to new competitors because new competitors would:

• A) Have to initiate a price war in order to enter the industry.
• B) Face increased production costs.
• C) Face increased marketing costs.
• D) Face higher learning costs, which would increase fixed costs.

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Definitions:

Simple Rate Of Return

The rate of return computed by dividing a project’s annual incremental net operating income by the initial investment required.

Straight-Line Method

A depreciation method that allocates an equal amount of depreciation each year over the asset's useful life.

Working Capital

The gap between a firm's current assets and its current liabilities, reflecting its short-term financial stability.

Net Present Value

A financial metric that calculates the present value of future cash flows minus the initial investment, used in capital budgeting to assess the profitability of investments.