BPM Corp. is a manufacturer of radar systems for regional-sized jet aircraft. The company has announced plans to enter into a joint venture with J3 Composites, a producer of advanced composite materials. The announced venture will produce a new, combined product consisting of the radar unit and protective composite cover. Which of the following is an accurate interpretation of this announcement?
A) BPM will own more than 50 percent of the venture and a new company will be formed.
B) J3 will own more than 50 percent of the venture and a new company will be formed.
C) BPM and J3 will both own 50 percent of the venture and a new company will be formed.
D) BPM and J3 will both own 50 percent of the venture but no new company will be formed.

Question

Quizplus · Accepted Answer

The announcement states that BPM and J3 will enter into a joint venture to produce a new combined product. It also suggests that both companies will contribute their expertise to the venture. Therefore, it is likely that the ownership of the new venture will be split equally (50-50) between BPM and J3, and a new company will be formed to produce the combined product. This option is consistent with the typical structure of joint ventures where each partner has an equal stake in the venture.

BPM Corp Is a Manufacturer of Radar Systems for Regional-Sized Jet