Which of the Following Is an Advantage of Applying the Economic

question 90

Multiple Choice

Which of the following is an advantage of applying the economic value creation perspective to assess a firm's performance?

• A) When the need for "hard numbers" arises, managers and analysts rely on economic value creation perspective to measure competitive advantage.
• B) In economic value perspective, analysts not only consider historical costs, but also opportunity costs.
• C) Arriving at the economic value created is easy because determining the value of a good in the eyes of consumers is a simple task.
• D) It is the most efficient tool for assessing corporate-level competitive advantage of highly diversified companies with large product portfolios.

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Definitions:

Payback Period

denotes the length of time required to recoup the cost of an investment, helping investors understand the risk and liquidity of the project.

Simple Rate of Return

A method to estimate the profitability of an investment, calculated by dividing the net annual income by the initial investment cost.

Deliver of Prescriptions

The process or service of delivering prescribed medication to patients.

Discount Rate

In discounted cash flow analysis, this interest rate is crucial for deducing the present monetary value of cash inflows expected in future periods.