Why Would a Company Pay Less Than the Market Rate

question 55

Multiple Choice

Why would a company pay less than the market rate?

• A) It has excellent benefits.
• B) It is located in a highly-desirable part of the country, to which people are anxious to move.
• C) It provides good job security.
• D) The content of its job are very satisfying.
• E) All of these are reasons to pay less than the market rate.

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was acquired, reflecting its decrease in value over time.

Cash Dividends

Payments made by a corporation to its shareholders out of its profits or reserves.

Investing Activities

Financial activities related to buying or selling long-term assets and investments, a key component of a company’s cash flow statement.