EVA® (Economic Value Added)

question 104

Multiple Choice

EVA® (economic value added) :

• A) Is another name for return on investment (ROI).
• B) Is generally synonymous with residual income (RI).
• C) Encourages investment center managers to accept new investments that have an ROI greater than the existing ROI of the center.
• D) Of $100,000 for an investment center indicates that the investment center earned $100,000 of after-tax profit for the company as a whole.
• E) Of $100,000 for an investment center indicates that the investment center's economic profit for the period was $100,000.

Analyze the concept and calculations of net present value and its significance in investment decisions.

Grasp the problem of multiple rates of return and its impact on project evaluation.

Identify and differentiate between mutually exclusive and independent projects.

Understand the limitations and applications of the payback period method in capital budgeting.

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Definitions:

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The legal responsibility auditors face for failing to detect or report inaccuracies in financial statements.