Trout Corp

question 9

Multiple Choice

Trout Corp., Kirgo Ltd., and Sturgeon Inc., three of the leading construction companies in the United States, have decided to join hands and create a new cement manufacturing company.According to their agreement, Trout Corp.will have 50 percent equity, Kirgo Ltd.will have 20 percent equity, and Sturgeon Inc.will have 30 percent equity.In this given scenario, Sturgeon Inc.is referred to as a ________.

• A)minority JV partner
• B)majority JV partner
• C)sole proprietor
• D)franchisor

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Definitions:

Relevant Interest Rate

The appropriate rate used for discounting future cash flows or evaluating investment opportunities, reflecting the cost of capital.

Opportunity Cost

The cost of forfeiting the next best alternative when making a decision or investment.

Next Best Use

An economic concept referring to the most profitable or valuable alternative use of a resource if it is not used in its current manner.

Prime Rate

The interest rate that commercial banks charge their most creditworthy customers, usually large corporations.