Why Would the Calculation of Economic Value Added (EVA)alleviate the Shortcoming

question 125

Multiple Choice

Why would the calculation of economic value added (EVA) alleviate the shortcoming of the return on investment measurement?

• A)Because it is required by generally accepted accounting principles.
• B)Because it is required for Securities and Exchange Commission reporting.
• C)Because it assures compliance with Internal Revenue Service Code requirements.
• D)Because managers many not accept good investment opportunities if the ROI of the investment is lower than the present ROI of the division.

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Definitions:

Sample

Part of a population.

Populations

Groups of individuals belonging to the same species that live in a shared region and are capable of interbreeding.

Correlations

A measure indicating the relationship between two variables, showing whether and how strongly they are related.

Causality

The principle or relationship between cause and effect where one event (the cause) leads to the outcome of another event (the effect).