Use of ________ in evaluating capital investment projects will promote goal congruence and lead to better decisions than using ________.
A) return on investment; economic profit
B) economic profit; contribution by segment
C) contribution controllable by division manager; contribution by segment
D) economic profit, return on investment

Question

Quizplus · Accepted Answer

Economic profit takes into account the cost of all capital, including equity, which aligns more closely with the overall goals of the firm than return on investment (ROI), which can encourage short-term thinking and underinvestment in projects that could be beneficial in the long run.

Use of ________ in Evaluating Capital Investment Projects Will Promote