Describe the Major Disadvantages of Using the Accounting Rate of Return

question 45

Essay

Describe the major disadvantages of using the accounting rate of return (ARR) and payback period methods as bases for evaluating capital projects.

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Definitions:

Learning Organisation

An organization that facilitates the learning of its members and continuously transforms itself to better adapt and thrive in a changing environment.

Continuous Change

A process or state where changes and updates occur frequently and systematically within an organization or system to adapt to external or internal demands.

Lessons of Experience

The knowledge and insights gained from personal and professional experiences, contributing to one's understanding and capabilities.

Learning Organisation

An entity that actively facilitates the learning of its members and continuously transforms itself to achieve superior outcomes.