Which of the following best describes a technique for assessing the value of investments which measures the difference between a division's (or other activity's) reported income and the financial opportunity cost of the division's investment base?
A) ROI
B) Residual income
C) EVA
D) Real options

Question

Quizplus · Accepted Answer

This technique is called residual income, which measures the income that remains after subtracting the required rate of return on the division's investment base. ROI (Return on Investment) measures the profitability of an investment as a percentage of the initial investment. EVA (Economic Value Added) is a variation of residual income that takes into account the cost of capital. Real options refer to the value that can be gained from having the option to make decisions in the future.

Which of the Following Best Describes a Technique for Assessing