The Purpose of a Contract Is To

question 271

Multiple Choice

The purpose of a contract is to:

• A) make it easy to do international business transactions
• B) encourage innovation
• C) encourage investment
• D) give parties confidence that bargained-for exchanges will be enforceable
• E) give parties confidence that they will make a profit

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Definitions:

Hurdle Rate

The minimum rate of return on an investment that a business requires before it will proceed with the project.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital where each category of capital is proportionately weighted.

Fixed Order Interval

A replenishment method where orders are placed at fixed intervals, ensuring a periodic review and stock refill.

EOQ Model

Economic Order Quantity Model, an inventory management tool used to determine the optimal order size that minimizes total inventory costs including holding and ordering costs.