If a Marketing Plan Requires That the Firm Obtain Additional

question 125

Multiple Choice

If a marketing plan requires that the firm obtain additional capital, a manager should remember that:

• A) Interest expense on a loan may impact prices and profits.
• B) A company with a successful marketing strategy has its own internal source of funds--profits.
• C) Institutions that loan money are usually even less willing to take a risk than are investors who buy stock.
• D) The firm may be able to sell stock to its own employees.
• E) All of the above are true.

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Definitions:

Discount Rate

The rate of interest deployed in DCF assessments to establish the present worth of forthcoming cash flows.

Pretax Return

The income a company generates before any taxes are subtracted.

Working Capital

The gap between an organization's current assets and its current liabilities, reflecting the business's short-term fiscal stability and operational effectiveness.

Salvage Value

The projected sales value of an asset at the termination of its effective life.