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41.     EVA usually uses after-tax numbers.
     
42.     EVA companies look upon R&D as a capital investment, and not immediately expensed.
     
43.     When a company measures performance using residual income, managers tend to invest in any project earning more than the cost of capital and thus raise the firm’s total profits.
     
44.     When companies maximize residual income, they are maximizing their rate of return, a percentage.
     
45.     In general, for companies using ROI, the most profitable divisions have more incentive to invest in new projects than do the least profitable divisions.
     
46.     In general, use of residual income or EVA will promote goal congruence and lead to better decisions than using ROI.
     
47.     Most companies use residual income in evaluating projects, not ROI.
     


48.     In measuring the performance of a division manager, stockholders' equity should not be used as the amount of invested capital.


49.      In measuring income, either the net book value or the gross book value can be used.           

50.     Possible definitions of invested capital include total assets employed and stockholders’ equity.
     
51.     A frequent criterion for asset allocation is avoidability.
     
52.     A possible allocation base for receivables, when assets are not directly identifiable with a specific division, is sales weighted by payment terms.
     
53.     When the allocation of an asset would be arbitrary, many managers believe that it is better to allocate based on divisional sales revenue.
     
54.     Historical costs may be subjective.
     
55.     The historical-cost system may be superior for the nonroutine evaluation of performance.
     
56.     The proponents of gross book value maintain that it facilitates comparisons between years and between plants or divisions.
     
57.     The rate of return on net book value decreases as the equipment ages.
     
58.     The rate of return on gross book value will not change if operating income remains constant.
     
59.     Managers evaluated using net book value will tend to replace assets sooner than will those managers in firms using gross book value.
     
60.     Net asset value promotes a more conservative approach to asset replacement as compared with gross book value.
     

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