In Addition to Your Initial Investment, You Will Have to Pay

question 3

Multiple Choice

In addition to your initial investment, you will have to pay a(n) _____ for continued support from a franchiser and the right to keep using the company's trade name.

• A) advertising fee
• B) management charge
• C) business assessment
• D) royalty fee

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Definitions:

Present Value Interest Factors

A factor used to calculate the present value of a future amount when the interest rate and period are known.

Guaranteed Residual Value

Guaranteed Residual Value is an assurance that the value of an asset at the end of its lease term will be at least a specified amount.

Maintenance Agreement

A contract between a service provider and a client that outlines the terms for the maintenance of equipment, buildings, or software.

Implicit Lease Rate

The interest rate implied in a lease agreement, factoring both the lease payments and the value of the leased asset.