Using Ending Balances for the Investment Base in Computing Return

question 74

Multiple Choice

Using ending balances for the investment base in computing return on investment (ROI) might encourage managers to acquire assets:

• A) early in the year and dispose of assets late in the year.
• B) early in the year and dispose of assets early in the year.
• C) late in the year and dispose of assets late in the year.
• D) late in the year and dispose of assets early in the year.

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Definitions:

Thousandths

A decimal place three places to the right of the decimal point, representing parts of a thousand.

Number Expressed

A way of representing a quantity or value in terms of digits or symbols.

Thousandths

A fractional part in a series, representing one part out of a thousand.

Hundred-Thousandths

A decimal fraction represented as one part in a hundred thousand, indicating a very small quantity in precise calculations.