The AARR method is similar to the IRR method as ________.
A) both calculate the return using after-tax cash flows
B) both calculate the return using operating-income numbers after considering accruals and taxes
C) both calculate the result in terms of percentage
D) both consider the time value of money

Question

Quizplus · Accepted Answer

Both the AARR method and the IRR method calculate the return in terms of percentage, making choice C correct. However, the AARR method does not necessarily use after-tax cash flows like the IRR method, making choice A incorrect. The AARR method also does not consider accruals, and taxes like the IRR method, making choice B incorrect. Finally, while both methods consider the time value of money, this is not a distinguishing factor between the two methods, making choice D incomplete.

The AARR Method Is Similar to the IRR Method as ________