A Segment of Mega Inc

question 107

Multiple Choice

A segment of Mega Inc., manufactures and sells blankets.The various models of blankets are produced in a single factory using stable technology.They are sold by the sales department, also located in the factory.The segment is most probably accounted for as a(n)

• A) cost center.
• B) revenue center.
• C) profit center.
• D) investment center.
• E) None of these.

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Definitions:

Project Risk

The potential for encountering unknown or unforeseen factors that can lead to project failure, such as cost overruns, delays, and scope creep.

Cost of Equity

The return that shareholders require or expect to realize on their investment, representing the opportunity cost of investing in the company.

Yield

The earnings generated and realized on an investment over a particular period, expressed as a percentage of the investment's cost or current market value.

Risk Premium

The extra return or reward that an investor expects to receive for taking a higher risk compared to a risk-free asset.