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:

Placebo Control Group

is a group in an experiment that receives a sham or inactive treatment, which is used to assess the psychological impact of receiving treatment rather than the treatment's actual efficacy.

Real Control Group

Represents a group in an experiment that does not receive the treatment or intervention, used as a benchmark to measure the effect of the treatment.

Matched Control Group

A group of subjects that is equivalent to the experimental group in key characteristics but does not receive the experimental treatment or intervention.

Error Variance

The portion of variation in a set of observations that arises from random factors as opposed to systematic influences.