Day 50 Flashcards
1
Q
What is one explanation that EVA is higher than Residual Income?
A
Cost of Capital is less than the Hurdle Rate
EVA method uses cost of capital on its calculation
Residual Income uses a company established hurdle rate
MCQ-07780
2
Q
True or False: The Payback period is a method that can be used to select a desired rate of return for a capital project
A
False
MCQ-07803
3
Q
Equation: Direct Materials Used
A
Beg. DM + Purchases - Returns + Transportation In - Ending DM
MCQ-03953
4
Q
The Imputed Interest rate used for residual income approach can be best characterized as:
A
Historical WACC for the company
MCQ-03452
