If ROI is used to evaluate a manager’s performance for a relatively new division, which of the following measures for assets (or investment) will increase ROI? a. Gross book value used instead of net book value. b. Net book value using accelerated rather than straight-line depreciation. c. Gross book value used instead of replacement cost, if gross book value is higher. d. Replacement cost used instead of liquidation value, if replacement cost is higher.
If ROI is used to evaluate a manager’s performance for a relatively new division, which of the following measures for assets (or investment) will increase ROI? a. Gross book value used instead of net book value. b. Net book value using accelerated rather than straight-line depreciation. c. Gross book value used instead of replacement cost, if gross book value is higher. d. Replacement cost used instead of liquidation value, if replacement cost is higher.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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If
a. Gross book value used instead of net book value.
b. Net book value using accelerated rather than straight-line
c. Gross book value used instead of replacement cost, if gross book value is higher.
d. Replacement cost used instead of liquidation value, if replacement cost is higher.
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