Which of the following statements is CORRECT?
A. If a firm is found guilty of cannibalization in a court of law, then it is judged to have taken unfair advantage of its competitors. Thus, cannibalization is dealt with by society through the antitrust laws.
B. If a firm is found guilty of cannibalization in a court of law, then it is judged to have taken unfair advantage of its customers. Thus, cannibalization is dealt with by society through the antitrust laws.
C. If cannibalization exists, then the cash flows associated with the project must be increased to offset these effects. Otherwise, the calculated NPV will be biased downward.
D. If cannibalization is determined to exist, then this means that the calculated NPV if cannibalization is considered will be higher than the NPV if this effect is not recognized.
E. Cannibalization, as described in the text, is a type of externality that is not against the law, and any harm it causes is done to the firm itself.
Answer: E
You might also like to view...
Hunter's, Inc reported a balance of $1,410 in its cash account at the end of the month. There were $1,200 of deposits in transit and $1,150 of checks outstanding. The bank statement showed a balance of $1,510, service charges of $70, and the collection of a note plus interest. The note had a face value of $170. How much interest did the bank collect for the company?
A) $ 30 B) $ 50 C) $290 D) $390
Which of the following occurs when employee bonuses are based upon reaching a financial target such as return on assets or net income?
A. piece-meal plan B. gain-sharing plan C. stock options D. profit-sharing plan
If an audience member asks a question that moves the presentation off track, it is acceptable to indicate that his or her question is not appropriate
Indicate whether the statement is true or false.
The Allowance for Bad Debts account is a contra-asset account
Indicate whether the statement is true or false