Donald Enjoys the Excitement and Challenge of Forming a Firm

question 145

Multiple Choice

Donald enjoys the excitement and challenge of forming a firm in Europe that is totally owned and controlled by his company because he knows that although the investment will be substantial,it could result in a large return.This type of organization is an example of a ____.

• A)joint venture
• B)total investment agreement
• C)strategic alliance
• D)wholly-owned subsidiary
• E)maquiladoras

---

Definitions:

NPV Rule

The principle that an investment is considered acceptable if its net present value (NPV) is positive, under the context of discounted cash flow analysis.

Decision-Maker

An individual or group responsible for making choices that will impact themselves or others, often involving allocation of resources or resolutions in the face of challenges.

Zero NPV

A scenario in which the net present value of a project or investment is zero, indicating that the projected cash flows exactly discount the initial investment, showing neither a loss nor a gain.

Multiple IRRs

A phenomenon that occurs when there is more than one internal rate of return for a project due to changing cash flow signs over the project's lifetime.