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Because Residual Income (RI)is a Dollar Amount,in Contrast to a Percentage

Question 9

Multiple Choice

Because residual income (RI) is a dollar amount,in contrast to a percentage (as is return on investment,ROI) ,RI:


A) Allows,through different discount rates,adjustment for differing levels of risk across investment centers.
B) Cannot be used to evaluate the performance of a given investment center over time.
C) Is less useful than ROI for performance-evaluation purposes.
D) Allows for differing investment amounts for different investment centers.
E) Is less useful to stockholders in the company.

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