Which of the Following Is NOT a Reason for Evaluating

question 4

Multiple Choice

Which of the following is NOT a reason for evaluating subunits over a multi-year time horizon?

• A)Benefits of actions taken in the current period may not show up in a short-term performance measure.
• B)Managers may curtail R & D or plant maintenance in order to increase short-term results.
• C)Investments may actually decrease ROI and or RI in the short-term.
• D)The NPV of the cash flows over the life of an investment equals [total assets ÷ ROI].
• E)Investments may actually decrease ROI and or RI in the short-term, and benefits of actions taken in the current period may not show up in a short-term performance measure.

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Definitions:

Intertemporal Price Discrimination

A pricing strategy where a seller changes prices over time for the same product or service to different consumers, aiming to maximize profits by targeting price sensitivity at different time periods.

Cellular Phone

A wireless handheld device that allows users to make and receive calls and access data services over a cellular network.

Price Discrimination

The practice of selling the same product to different customers at different prices for reasons not associated with cost differences.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the benefit to consumers.