A Firm Engages in Backward Vertical Integration When It Incorporates

question 65

True/False

A firm engages in backward vertical integration when it incorporates more stages of the value chain within its boundaries and those stages bring it closer to gaining access to raw materials.

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Definitions:

Salvage Value

The evaluated resale price of an asset after its lifespan of usefulness.

Straight-Line Method

A depreciation technique where an asset loses an equal amount of value each year over its useful life.

Payback Period

The duration needed to recoup the expenses of an investment.

Simple Rate of Return

A financial metric used to evaluate the efficiency of an investment or to compare the efficiencies of several investments, calculating net annual profit divided by initial investment cost.