Ideas About Potential New Products Should

question 114

Multiple Choice

Ideas about potential new products should

• A) be encouraged from any and all sources, since only a few ideas will develop into successful products.
• B) not be eliminated from consideration until they have been tested in the commercialization stage.
• C) come primarily from employees of the firm-so that time won't be wasted evaluating product ideas that are inconsistent with the firm's objectives and resources.
• D) come from outside the firm, since studies show that really new ideas require a fresh perspective.
• E) None of these alternatives is correct.

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Definitions:

Cost of Capital

The return rate that a company must earn on its investment projects to maintain its market value and satisfy its creditors and investors.

Market Value

The current value at which the market facilitates the sale or purchase of a service or asset.

WACC

Weighted Average Cost of Capital; a calculation used to assess the cost of a company's financing by averaging the costs of its equity and debt, weighted by their respective proportions in the company's capital structure.

Level of Risk

Describes the amount of uncertainty or potential financial loss inherent in an investment decision.