Hayes Division, Which Is Located in a Remote Area in Northern

question 30

Multiple Choice

Hayes Division, which is located in a remote area in Northern Ontario, has been stagnant over the past five years, neither growing nor contracting in size and profitability. Investments in new property, plant, and equipment have been minimal. Would the division's use of total assets (valued at net book value) when measuring ROI result in (1) using numbers that are consistent with those on the balance sheet and (2) a rising ROI over time? $\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Consistent with Numbers } \\\text { on the Balance Sheet? }\end{array} & \begin{array} { c } \text { Produce a Rising Return on } \\\text { Investment Over Time? }\end{array} \\\hline 1 & \text { Yes } & \text { Yes } \\\hline 2 & \text { Yes } & \text { No } \\\hline 3 & \text { No } & \text { Yes } \\\hline 4 & \text { No } & \text { No } \\\hline 5 & \text { Yes } & \text { Need more information to judge } \\\hline\end{array}$

• A)1
• B)2
• C)3
• D)4
• E)5

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Definitions:

Price Of X

Refers to the monetary value or cost required to purchase a specific good or service denoted as "X".

Price Of Y

The cost at which a particular good, referred to as "Y" in economic models, is sold or purchased in the market.

Commodity 1

an economic term referring to a raw material or primary agricultural product that can be bought and sold, denoted here as the first in a series or category.

Commodity 2

Another generic term for any good or service, used distinctively from "Commodity X" in economic analysis.