To Minimize the Threat of Substitute Products or Services,some Businesses

question 72

Multiple Choice

To minimize the threat of substitute products or services,some businesses will create switching costs.What is a switching cost?

• A)The price of the product or service is so high that a customer cannot afford to purchase another
• B)Once you leave the first business for a competitor,you lose you ability to switch back to the first business
• C)A non-refundable fine levied against the customer for switching to a competitor
• D)Costs that make customers reluctant to switch to another project or service supplier

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Definitions:

NPV

Net Present Value, a calculation used to assess the profitability of an investment by summing the present values of all cash inflows and outflows associated with it.

Discount Rate

The discount rate applied in the discounted cash flow method to calculate the current value of future cash flows.

Tax Rate

The rate at which a person or company is charged taxes by the state.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful lifespan.