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 reason for evaluating subunits over a multi-year time horizon is to account for the long-term impact of investments and actions taken, which may not be reflected in short-term performance measures. Option D, however, is not a reason for evaluating subunits over a multi-year time horizon but rather a formula for calculating the NPV of an investment.

Which of the Following Is NOT a Reason for Evaluating