Residual income $($RI$)$ may be a better measure for performance evaluation of an investment center manager than return on investment $($ROI$)$ because:

Question $6$ options:

Problems associated with measuring the asset base are eliminated.

Desirable investment decisions will not likely be neglected by high$-$return divisions of the company.

Only the gross book value $($GBV$)$ of assets needs to be calculated.

Returns do not increase as assets are depreciated.

Arguments over the implicit cost of capital are eliminated.