The average accounting return (AAR) rule can be best stated as:
A) An investment is acceptable if its AAR is less than a target AAR.
B) An investment is acceptable if its AAR exceeds a target AAR.
C) An investment is acceptable if its AAR exceeds the ﬁrm's return on equity (ROE).
D) An investment is acceptable if its AAR is less than the ﬁrm's return on assets (ROA).

Question

Quizplus · Accepted Answer

The average accounting return (AAR) rule states that an investment is acceptable if its AAR exceeds a target AAR. Therefore, choice B is the best answer.

The Average Accounting Return (AAR) Rule Can Be Best Stated