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Business, 12.02.2021 04:20 idontknow113

Because residual income (RI) is a dollar amount, in contrast to a percentage (as is return on investment, ROI), RI: Is less useful than ROI for performance-evaluation purposes. Allows for differing investment amounts for different investment centers. Cannot be used to evaluate the financial performance of a given investment center over time. Allows, through different discount rates, adjustment for differing levels of risk across investment centers within an organization. Is less useful to stockholders of the company.

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