The incentives of an investment center manager are not affected by the tendency for net book value to produce a misleading increase in return on investment over time.

Question

Quizplus · Accepted Answer

The incentives of an investment center manager can be significantly affected by the tendency for net book value to decrease over time due to depreciation, potentially leading to a misleading increase in return on investment (ROI) as the denominator in the ROI calculation decreases. This can influence a manager's investment decisions and their perceived performance.

The Incentives of an Investment Center Manager Are Not Affected