Use of Net Book Value (NBV) in Valuing Investment in Operating

question 149

Multiple Choice

Use of net book value (NBV) in valuing investment in operating plant assets for investment centers, in contrast to using an estimate of current value, will:

• A) Have no appreciable effect on ROI in most situations.
• B) Have no appreciable effect on plant asset book value.
• C) Have no appreciable effect on operating income reported by the investment centers.
• D) Usually understate ROI.
• E) Usually overstate ROI.

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Definitions:

Extensive Search

The thorough process of seeking information and evaluating multiple options before making a purchase decision, often undertaken for high-involvement products.

Need Recognition

The initial step in the consumer decision process that occurs when a consumer identifies a difference between their current state and a desired state.

Visible or Symbolic

Refers to methods of communication or expression where meanings are either directly observable or represented through symbols.

Social Risk

The potential for an individual to experience loss or damage to their social status, relationships, or respect within a community.