Question

Residual income is a better measure for performance evaluationof an investment center manager than return on investment because:(CMA adapted)

A. the problems associated with measuring the asset base areeliminated.

B. desirable investment decisions will not be neglected byhigh-return divisions.

C. only the gross book value of assets needs to becalculated.

D. the arguments about the implicit cost of interest areeliminated.



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