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A useful measure used to evaluate the manager of an investment center is investment center residual...

A useful measure used to evaluate the manager of an investment center is investment center residual income.

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True

False

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Answer : True

Residual income is the difference between the Actual Return earned and the minimum  Required Rate of Return from the investment. A Positive residual income indicated that the firm generates more than the minimum required rate of return. Since the Return depends on the investment. Residual income indicates the does the investment center manager took a good investment or not.

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