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Question 16 of 16 < > 7.8/9 E Iqaluit Corporation recently announced a bonus plan to be awarded to the vice-president of the most
Question 16 of 16 < > 7.8/9 E Iqaluit Corporation recently announced a bonus plan to be awarded to the vice-president of the most profitable division. The three managers are to choose whether the ROI or residual income (RI) will be used to measure profitability. In addition, they must decide whether investments will be measured using the gross book value (GBV) or net book value (NBV) of assets. Iqaluit defines income as operating income and investments as total assets. The following information is available for the year just ended: Gross Book Division Value of Assets Accumulated Depreciation Operating Income A $720,000 $360,000 $90,000 B 690,000 414,000 77.970 C 230,000 46,000 46,000 NBV ROI [A] 25.00 % [B] 28.25 % [C] 25.00 % GBV RI [A] $18,000 [B] $8.970 [C] $23,000
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