Which of the Following Would Be an Argument in Favor

Multiple Choice

Which of the following would be an argument in favor of using residual income models in performance measurement?

A) All forms of residual income are consistent with discounted net cash flows for any method of depreciation.
B) Residual income focuses on historical performance.
C) The determination of residual income is dependent on an accurate estimate of the cost of capital.
D) Residual income recognizes that all capital, debt as well as equity, has a cost.