All of the following statements regarding the accounting rate of return (ARR) are true except:
A) The ARR is helpful when analyzing projects with a positive net present value.
B) The ARR is the only method that uses accrual accounting instead of cash flows.
C) The ARR uses total annual after-tax operating income earned by the projects over its lifespan.
D) The ARR is most often used by managers that have bonuses tied to divisional profits.
Correct Answer:
Verified
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