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# A company that invests the necessary infrastructure in a large

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A company that invests the necessary infrastructure in a large  [#permalink]

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08 Aug 2015, 02:52
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Difficulty:

65% (hard)

Question Stats:

59% (01:34) correct 41% (01:36) wrong based on 359 sessions

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A company that invests the necessary infrastructure in a large untapped diamond mine can reap as much as 700% profit in the first year. Some of the largest untapped diamond mines in the world are in the nation of Shagoca. Therefore, the American company that brokers a deal in the capital Conkin that allows it to put the necessary infrastructure in place at those mines stands to reap tremendous profits.

Which of the following, if true, most helps to explain why American companies are not eager to invest in infrastructure necessarily for diamond mining in Shagoca?

A) The diamond mines in Shagoca are located close to population centers, which would allow for easy transport
B) Diamond mining in climates closer to the equator, such as that in Shagoca, is much easier than diamond mining in regions where the soil is frozen most of the year
C) In certain states in Shagoca, profit from diamond mining is as heavily taxed as it is in the United States
D) A minority of the traders buying the diamonds will be citizens of Shagoca.
E) The fifteen-year-old civil war in Shagoca has caused significant setbacks for many foreign investments.

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11 Aug 2015, 02:15
E makes complete sense.

The other option C talks only about "certain states". It means in other states of Shagoca the argument wont hold any grounds...

As per E the investment environment is bad.

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Re: A company that invests the necessary infrastructure in a large  [#permalink]

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06 Apr 2016, 18:59
Harley1980 wrote:
A company that invests the necessary infrastructure in a large untapped diamond mine can reap as much as 700% profit in the first year. Some of the largest untapped diamond mines in the world are in the nation of Shagoca. Therefore, the American company that brokers a deal in the capital Conkin that allows it to put the necessary infrastructure in place at those mines stands to reap tremendous profits.

Which of the following, if true, most helps to explain why American companies are not eager to invest in infrastructure necessarily for diamond mining in Shagoca?

A) The diamond mines in Shagoca are located close to population centers, which would allow for easy transport
B) Diamond mining in climates closer to the equator, such as that in Shagoca, is much easier than diamond mining in regions where the soil is frozen most of the year
C) In certain states in Shagoca, profit from diamond mining is as heavily taxed as it is in the United States
D) A minority of the traders buying the diamonds will be citizens of Shagoca.
E) The fifteen-year-old civil war in Shagoca has caused significant setbacks for many foreign investments.

A - strengthener
B - strengthener
C - neutral..even in US companies can make 700% profit in first year..so doubtful one..close but not.
D - irrelevant
E - looks good.

E for me.
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A company that invests the necessary infrastructure in a large  [#permalink]

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24 May 2018, 19:07

MAGOOSH OFFICIAL EXPLANATION:

This sounds like situation with a possibility of huge profits. There must be something we are missing to explain why American companies are not eager to invest here.

(E) is the credited answer. If there's been a civil war for 15 years, this sounds like it's not going to resolve any time soon. War = potential destruction of infrastructure as well as loss of life. Any company going into build a diamond mine could lose the sum total of their initial outlay in one well-placed bomb, losing several employees in the process! That certainly sounds like something that would make a company reluctant to invest in Shagoca.

(A) & (B) do the opposite of what we want: they both provide explanations of why the situation would be more profitable, which does not explain why companies would not want to invest there.

(C) is weak: true, no one likes paying taxes, but if you can make 700% profits on your initial investment, then taxes are not a huge concern. This, in and of itself, would not explain the reluctance of companies.

(D) is strangely irrelevant: diamonds always have buyers worldwide, and transport costs for diamonds are not significant. If some of the buyers are actually citizens of Shagoca, this makes no difference at all in how profitable these investments would be.
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Re: A company that invests the necessary infrastructure in a large  [#permalink]

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09 Jun 2018, 05:59
Hi All,

I picked B for this question as the question asks what would most explain why American companies are not keen on "investing in infrastructure". My reasoning for picking B is that if the climate permits that the mining can be done easily without the necessary infrastructure then why would the companies be keen on investing money for the necessary infrastructure.

Is there something missing in my reasoning.

Would appreciate any help on this.

Thanks
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Re: A company that invests the necessary infrastructure in a large  [#permalink]

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09 Jun 2018, 08:37
Amirfunc wrote:
Hi All,

I picked B for this question as the question asks what would most explain why American companies are not keen on "investing in infrastructure". My reasoning for picking B is that if the climate permits that the mining can be done easily without the necessary infrastructure then why would the companies be keen on investing money for the necessary infrastructure.

Is there something missing in my reasoning.

Would appreciate any help on this.

Thanks

Option B is a strengthener. The question stem asks a reason for which the American companies are hesitating to invest but option B gives a reason why they shouldn't hesitate.

Option E clearly gives a strong reason why a company wouldn't invest in shicagoa that is because of the civil war there which could result in huge losses if they invest.
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Re: A company that invests the necessary infrastructure in a large  [#permalink]

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09 Jun 2018, 08:44
Amirfunc wrote:
Hi All,

I picked B for this question as the question asks what would most explain why American companies are not keen on "investing in infrastructure". My reasoning for picking B is that if the climate permits that the mining can be done easily without the necessary infrastructure then why would the companies be keen on investing money for the necessary infrastructure.

Is there something missing in my reasoning.

Would appreciate any help on this.

Thanks

Hi Amirfunc,

Option B does not specify "without the necessary infrastructure". It says the mining will be easier.
The Infrastructure is "necessary" --> no infrastructure = no mining possible (irrespective of the climate)
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A company that invests the necessary infrastructure in a large  [#permalink]

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10 Jun 2018, 04:19
Akash720 and navaneethmmb

Thank you for your inputs, seems clear to me now.

Appreciate it.
A company that invests the necessary infrastructure in a large &nbs [#permalink] 10 Jun 2018, 04:19
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