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.

Question

Quizplus · Accepted Answer

The NPV of the cash flows over the life of an investment is a long-term measure and is not a reason for evaluating subunits over a multi-year time horizon. A, B, C, and E are all valid reasons for evaluating subunits over a multi-year time horizon.

Which of the Following Is Not a Reason for Evaluating