Typically,a Subsidiary Operating in a Developing Country Faces Prohibitively High

question 27

Multiple Choice

Typically,a subsidiary operating in a developing country faces prohibitively high cost of capital which:

• A)does not affect the parent's estimate of NPV from the proposed project.
• B)makes the parent's real cost of capital in its home market lower and increases the parent's estimate of NPV from the proposed project.
• C)makes the parent's real cost of capital in its home market higher and decreases the parent's estimate of NPV from the proposed project.
• D)makes the parent's real cost of capital in its home market higher and increases the parent's estimate of NPV from the proposed project.

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Definitions:

FOB Destination

A term specifying that the seller is responsible for the goods and the cost of shipping until they are received by the buyer at the destination.

Ending Inventory

The cumulative worth of all remaining inventory a company holds at the conclusion of a financial period.

Merchandising Business

A type of business that purchases goods for resale to customers, aiming to sell the goods at a higher price than the cost to earn a profit.

Service Business

A business providing services rather than products to customers.