Unlike the payback method, which ignores cash flows after the payback period, the AARR method considers income earned throughout a project's expected useful life.

Question

Quizplus · Accepted Answer

The statement is correct. The AARR method (average accounting rate of return) takes into account the average income earned over the entire useful life of the project, unlike the payback method which only considers the time it takes to recoup the initial investment.

Unlike the Payback Method, Which Ignores Cash Flows After the Payback