The MNE in an Effort to Minimize the Cost of External

question 27

Multiple Choice

The MNE in an effort to minimize the cost of external funds should choose ________ funds to minimize ________.

• A)internal; debt financing.
• B)internal; taxes and political risk.
• C)external; debt financing.
• D)external; taxes and political risk.

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Definitions:

Donut Maker

A kitchen appliance used specifically for making donuts.

Simple Rate

A basic, uncomplicated rate often used in calculations that do not require detailed financial complexity.

Payback Period

The amount of time it takes for an investment to generate cash flows sufficient to recover the initial cost of the investment.

Discount Rate

The interest rate used to discount future cash flows of an investment to present value, reflecting the opportunity cost of capital.