The Decline of the U

question 11

Multiple Choice

The decline of the U.S.dollar relative to other currencies has caused firms outside the U.S., such as BMW and Volkswagen to:

• A)Experience increasing sales in the U.S.
• B)Experience increasing sales worldwide.
• C)Locate plants in the U.S.to reduce overall manufacturing costs.
• D)Require dealers to make payments in the Euro.
• E)None of the above.

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Definitions:

Payback Period

The length of time it takes for an investment to generate enough cash flow to recoup its original cost.

Accounting Rate of Return

The accounting rate of return (ARR) is an accounting metric that measures the profitability of an investment by dividing the average annual profit by the initial investment cost.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholders' wealth maximization.

Time Value of Money

A financial principle that posits money available now is worth more than the same amount in the future due to its potential earning capacity.