The Accounting Rate of Return (ARR)

question 165

Multiple Choice

The accounting rate of return (ARR) :

• A) Is synonymous with the internal rate of return (IRR).
• B) Focuses on accrual-basis income numbers rather than after-tax cash flows.
• C) Generally provides a good estimate of a project's IRR.
• D) Explicitly recognizes the time value of money.
• E) Can be used to choose between mutually exclusive projects.

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Definitions:

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Degrees Of Freedom

The number of independent values or quantities that can vary in an analysis without breaking any constraints.

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