Question

Suppose that World Corp. signs a contract to build a lumber processing plant in Siberia. If World Corp. signs a second contract agreeing to take partial payment for the plant in the form of lumber products produced at the plant, it is engaging in:

Answer 1

In the above scenario, World Corp. engaging in Compensation trade

Explanation:

Compensation trade is a type of countertrade procedure in which an incoming investment is repaid from the income generated by that investment.

In compensation trade, an investor is repaid by a share of the proceeds or outcomes produced by the goods and services provided by the investor.

Compensation trade is a type of barter where one of the flows is partly in commodities and partly in hard currency.

World Corp. take partial payment for the plant in the form of lumber products produced at the plant is a Compensation trade.