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:

Standard Deviation

A parameter quantifying the divergence or scattering of data points in a dataset, reflecting the distance of these points from the average.

Shoe Life

In product durability, shoe life refers to the expected or actual duration that a shoe remains usable or maintains its quality under normal wearing conditions.

Marathon Runners

Athletes who participate in long-distance running events, typically 26.2 miles or 42.195 kilometers in length.

Standard Deviation

An indicator that quantifies the spread or diversity among data set values, showing the degree to which these values deviate from the average.