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

question 74

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:

Isolated Event

A singular occurrence that is distinct and separate from other occurrences, often without precedent or subsequent incidents of a similar nature.

Class Inclusion

Categorizing a new object or concept as belonging to a broader group of objects or concepts.

Preoperational Child

A stage in Jean Piaget's theory of cognitive development, typically from ages 2 to 7, where children begin to use language and think symbolically, but their thinking is still intuitive and egocentric.

Seriation

Placing objects in an order or series according to a property or trait.