A project with positive cash flows will always generate an acceptable accounting rate of return.

Question

Quizplus · Accepted Answer

The accounting rate of return (ARR) is based on the average annual accounting profit divided by the initial investment. Positive cash flows do not necessarily guarantee high accounting profits, as factors such as depreciation and accounting assumptions can impact profitability. Therefore, a project with positive cash flows may still result in a low or unacceptable accounting rate of return.

A Project with Positive Cash Flows Will Always Generate an Acceptable