Return on Investment Cannot Be Used Effectively to Evaluate Profit

question 89

True/False

Return on investment cannot be used effectively to evaluate profit centers because it motivates managers to make suboptimal decisions from the viewpoint of the organizations' owners.

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Definitions:

Extrinsic Motivation

A type of motivation driven by external rewards or pressures, rather than the enjoyment or interest in the task itself.

Pleasure

The feeling of happiness or satisfaction experienced from enjoyable activities or sensory impressions.

Graduation

The act of completing a course of study at an educational institution and receiving a degree, diploma, or certificate.

Incentives

Motivations or rewards that encourage a person to perform a certain action or behave in a specific way.