If the Net Present Value of a Direct Foreign Investment

question 12

Multiple Choice

If the net present value of a direct foreign investment is negative, the multinational firm should

• A) reject any proposals.
• B) consider establishing a sales office.
• C) consider licensing.
• D) both A and C.

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Definitions:

Volume Variance

A measure of the difference between the expected (budgeted) volume of sales or production and the actual volume, used in cost accounting and financial analysis.

Budget Variance

The difference between the budgeted or planned financial activity and the actual financial performance.

Volume Variance

The difference between the expected amount of output at the standard cost and the actual amount produced, measured at the standard cost.

Direct Labor-Hours

A measure of the total hours worked directly on the production of goods.