Which of the Following Is Not an Advantage of After-Tax

question 105

Multiple Choice

Which of the following is not an advantage of after-tax income as a performance measure?

• A) It reflects the results of decisions under the division manager's control.
• B) It summarizes the results of decisions affecting revenues and costs.
• C) It makes comparison of divisions easy because they use the same measure, dollars of income.
• D) It is financial income computed differently from the income of the firm.

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Definitions:

Market Rate

The prevailing interest rate available in the marketplace for instruments of similar credit risk and maturity.

Face Value

The nominal or dollar value printed on a bond, bill, or other financial instrument, representing the amount to be repaid at maturity.

Selling Premium

The amount by which the selling price of a bond exceeds its par value or face value.

Premium on Bonds Payable

The excess amount by which bonds are issued over their face value, representing an additional cost of borrowing to the issuer.