How Can FDI Undertaken to Serve the Home Market Stimulate

question 48

Multiple Choice

How can FDI undertaken to serve the home market stimulate economic growth in the home country?

• A) By freeing home-country resources to concentrate on activities where the home country has a comparative advantage
• B) By importing more goods and services than it is exporting
• C) By circumventing trade barriers that may have prevented direct exports in the past
• D) By reducing demand for home-country exports of capital equipment, intermediate goods, and complementary products

Recognize the role and limitations of accounting rate of return (ARR) in investment choices.

Identify different capital budgeting evaluation methods and their applications.

Understand the concept of the time value of money and its application in evaluating investment opportunities.

Gain insights into the impact of cash flows on investment appraisal decisions.

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Definitions:

Intangible Asset

An asset that lacks physical substance but provides future economic benefits, such as intellectual property, goodwill, and brand recognition.

Amortization

The gradual reduction of a debt or the spreading of the cost of an intangible asset over its useful life.

Asset Turnover

An efficiency indicator that evaluates how a company's assets are used to produce revenue from sales.

Goodwill

The intangible asset that arises when a business is purchased for more than the sum of its net assets' fair market value, reflecting brand, customer loyalty, and other non-physical assets.