A Company Has Decided to Outsource the Production of Key

question 33

Multiple Choice

A company has decided to outsource the production of key components for its main product to suppliers.What affect will this have on the product's bill of materials?

• A)None.
• B)The bill of materials will be wider.
• C)The bill of materials will be deeper.
• D)The bill of materials will be flatter.

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Definitions:

Effective Annual Rates

The real return on an investment, taking into account the effect of compounding interest over multiple periods within a year.

Equal Installments

Periodic payments of the same amount over the term of a loan or investment.

Borrowed

Borrowed refers to funds that have been taken on loan from external sources, which are expected to be paid back with interest over time.

Daily Compounding

The process where the interest on an investment is calculated daily and added to the principal, so that each subsequent calculation of interest includes interest previously earned.