The Major Difference Between the Net Present Value Method and the Annual

question 12

Multiple Choice

The major difference between the net present value method and the annual rate of return method in evaluating a capital project is

• A)the ARR method is easier for accountants to justify than the NPV method.
• B)the NPV method is easier for managers to justify than the ARR method.
• C)the ARR method focuses on overall profitability of a project.
• D)the NPV method focuses on the overall profitability of a project.

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Definitions:

Conformed

The process of adjusting one's behavior or thinking to match those of others, typically in a group context.

Door-In-The-Face Effect

A compliance technique that involves making a large request that is expected to be turned down in order to increase the likelihood that a smaller request will be accepted.

Requests

The act of politely or formally asking for something.

Asch

Refers to the Asch conformity experiments which demonstrate the influence of group pressure on individuals to conform.