International Products,a U

question 171

Multiple Choice

International Products,a U.S.firm that sells industrial cleansers and lubricants,wanted to sell its product to factories,hospitals,and labs in China,but it did not have the necessary expertise.As a result,International Products hired Asia Marketing & Management to sell,stock,and deliver a full assortment of products to the Chinese market.Asia Marketing & Management is an example of a(n)

• A)agent.
• B)wholesaler.
• C)global agent.
• D)retailer.
• E)industrial distributor.

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Definitions:

WACC

Weighted Average Cost of Capital; a computation that determines a company's capital cost by proportionally weighting each category of capital.

Capital Structure

The mix of a company's long-term liabilities, specific short-term liabilities, common equity and preferred equity, which funds its overall operations and growth.

Interest Tax Shield

The reduction in taxable income for individuals or corporations achieved by deducting interest payments on borrowed funds.

M&M Proposition II

A theory proposing that the cost of equity increases as a company increases its leverage, due to the riskier equity stream.