An Investment Is Acceptable If Its Average Accounting Return (AAR)

question 109

Multiple Choice

An investment is acceptable if its average accounting return (AAR) :

• A)is less than a target AAR.
• B)exceeds a target AAR.
• C)exceeds the firm's return on equity (ROE).
• D)is less than the firm's return on assets (ROA).
• E)is equal to zero.

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Definitions:

Investment Center

A business unit within a company that is responsible for generating its own revenue and profits, and it is evaluated based on its return on investment.