Answer the Following Questions Using the Information Below

question 48

Multiple Choice

Answer the following questions using the information below:
Barrier Reef Corporation manufactures jet skis.It plans to grow by producing high-quality jet skis at a low cost that are delivered in a timely manner.There are a number of other manufacturers who produce similar jet skis.Barrier Reef believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy.
-Barrier Reef's strategy is:

• A)cost leadership.
• B)product differentiation.
• C)downsizing.
• D)re-engineering.

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Definitions:

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds, encompassing debt and equity.

Internal Rate

Often referred to as Internal Rate of Return (IRR), it is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Profitability Index

A financial tool used to determine the desirability of an investment by dividing the present value of future cash flows by the initial investment cost.

Internal Rate of Return

A metric used in capital budgeting to estimate the profitability of potential investments.