The Adjusted Present Value (APV)model That Is Suitable for an MNC

question 19

Multiple Choice

The adjusted present value (APV) model that is suitable for an MNC is the basic net present value (NPV) model expanded to:

• A) distinguish between the market value of a levered firm and the market value of an unlevered firm.
• B) discern the blocking of certain cash flows by the host country from being legally remitted to the parent.
• C) consider foreign currency fluctuations or extra taxes imposed by the host country on foreign exchange remittances.
• D) All of these.

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Definitions:

Average Variable

Pertains to the expenses that change in proportion to the activity of a business, averaged per unit of production or operation.

Average Total Cost

The average cost per unit of output, calculated by dividing the total production cost by the number of units produced.

Producing Purses

The process of manufacturing handbags, which involves design, selection of materials, and assembly.

Average Fixed Cost

The aggregate fixed production costs per unit of output, calculated by dividing these costs by the total quantity of products made.