The Use of Replacement Cost of Assets for Purposes of Calculating

question 65

Multiple Choice

The use of replacement cost of assets for purposes of calculating return on investment (ROI) has the advantage of:

• A) Historical accuracy.
• B) Being a relevant measure of the level of investment in a continuing business.
• C) Objectivity.
• D) Consistency with generally accepted accounting principles (GAAP).
• E) Avoiding the need for developing estimates of current cost.

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Definitions:

Interaction Effect

Occurs when the effect of one independent variable on a dependent variable varies according to the level of another independent variable.

Two-way ANOVA

A statistical test used to determine the effect of two nominal predictor variables on a continuous outcome variable, considering interactions between the predictors.

Main Effect

The direct impact of an independent variable on a dependent variable in an experimental design.

Model Sum

A statistical term used to describe the total sum of squares in a model, measuring the variation explained by the model.