List Two Strengths and One Weakness of the Accounting Rate

question 143

Essay

List two strengths and one weakness of the accounting rate of return capital budgeting method.

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Definitions:

Concurrent Validity

A measure of how well a particular test correlates with a previously validated measure.

Content Validity

The extent to which a test measures all aspects of the construct it is supposed to measure.

Construct Validity

A measure of how well a test or tool assesses the construct it claims to measure, indicating the appropriateness of inferences made from test scores.

True Score

The actual score that accurately reflects the variable being measured, without measurement error.