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Managerial Accounting

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Purpose of Economic Value Added in Performance Measurement

MGRACT-3Y2R0Y

What is the purpose of Economic Value Added (EVA)?

Economic value added is a performance measure, similar to Residual Income, that

A

attempts to align the interests of shareholders with managers.

B

attempts to align the profits of the corporation with the stock price.

C

attempt to align the stock price with the interest of managers.

D

attempts to direct managers to projects that earn very high annual returns.