Drew's Company Imports Materials and Parts into a Free Trade

question 38

Multiple Choice

Drew's company imports materials and parts into a free trade zone (FTZ) within the United States and then exports finished products to other countries. Her company will:

• A) incur higher labor costs than other domestic companies.
• B) not be able to store finished goods with the FTZ.
• C) have to pay tariffs based on the value of both the parts and materials.
• D) have to pay tariffs based on the value of the finished products when they leave the country.
• E) not have to pay tariffs on the imported materials and parts.

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Definitions:

Return On Stockholders' Equity

A measure of financial performance calculated by dividing net income by average shareholders' equity, showing how effectively management uses equity from shareholders to generate profit.

Preferred Dividends

Payments made to preferred shareholders of a company before dividends are paid to common shareholders, typically fixed and paid at regular intervals.

Average Common Stockholders' Equity

It represents the average equity stake that common shareholders have in a company over a certain period, calculated by averaging the opening and closing common stockholders' equity balances.

Earnings Per Share

A financial indicator that divides a company's profit by the outstanding shares of its common stock, measuring the company's profitability per share.