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:

Distribution

The process of distributing or spreading something, often related to the supply of goods to various places for sale.

Negative Consequences

Unfavorable results or outcomes that occur as a direct or indirect result of an action or decision.

Intense and Long-lasting

Describing emotions, experiences, or processes that are powerful and extend over a considerable period of time.

Subjective Evaluation

The process of judging or assessing something based on personal feelings, tastes, or opinions rather than objective criteria.