If a Cola Producer Bought Out a Mango Juice Producer

question 186

Multiple Choice

If a cola producer bought out a Mango juice producer in an attempt to appeal to health-conscious consumers who do not drink soft drinks, it would be pursuing a ______________ opportunity.

• A) market development
• B) diversification
• C) market penetration
• D) product development

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Definitions:

Corporate WACC

Weighted Average Cost of Capital for a corporation, which is the average rate of return it must earn on its investments to maintain the value of its stock and pay its debt.

Expected Returns

The projected average return of an investment over a specified period, accounting for various possible outcomes.

After-Tax Cost of Debt

The net cost of debt to a company after accounting for the tax benefits of interest expenses.

CGT

Capital Gains Tax (CGT) is a tax on the profit earned from the sale of non-inventory assets that were purchased at a cost amount that was lower than the amount realized on the sale.