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After reading this chapter, you should be able to:

  LO 1   Evaluate divisional accounting income as a performance measure.

  LO 2   Interpret and use return on investment (ROI).

  LO 3   Interpret and use residual income (RI).

  LO 4   Interpret and use economic value added (EVA).

  LO 5   Explain how historical cost and net book value–based accounting measures can be misleading in evaluating performance.