XYZ INC Has Several Divisions and the One Managed by Dr

question 16

Multiple Choice

XYZ INC has several divisions and the one managed by Dr. Donaldson has asset base of $4 million and earnings after taxes is $2 million. A new project would earn $2 million per year on an investment of $3 million. If the new project is on, Mr. Donaldson's bonus should not be based on:

• A) EVA.
• B) ROA.
• C) Sales.
• D) Accounting profits.
• E) Cash flows.

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Definitions:

Sectoral Shifts

Changes in the economic landscape that cause resources (like labor) to move from one industry or sector to another, often due to technological changes or globalization.

Frictional Unemployment

Short-term unemployment that occurs when transitioning between jobs or entering the workforce.

Unemployment Insurance

Unemployment insurance is a government program that provides temporary financial assistance to workers who have lost their jobs through no fault of their own.

Structural Unemployment

Joblessness arising from the restructuring of industries, usually caused by advancements in technology, instead of variations in market supply or demand.