SUVmart Wants to Buy 250 Rhinos from AutoCorp Which Wants

question 34

Multiple Choice

SUVmart wants to buy 250 Rhinos from AutoCorp which wants to charge an upfront franchise fee. What will the franchise fee be?

• A) It can be anything below MC so as to guarantee SUVmart's profits.
• B) It can be anything above MC so as to guarantee some profits for AutoCorp.
• C) It has to be equal to TC so that AutoCorp breaks even on the deal.
• D) It has to be equal to MC.

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Definitions:

Working Capital Management

The management of a company’s short-term assets and liabilities to ensure its continued operation and maximize financial efficiency.

Inventory Management

The supervisory process focusing on ordering, storing, using, and selling a company's inventory.

Short-Term Debt Financing

Borrowing of funds for a period of one year or less to meet short-term financial needs of a company.

Credit Availability

The ease with which individuals or businesses can obtain loans or credit.