Most entities,when making an investment decision using the ARR method,will set a minimum level of return known as their Required Rate of Return (RRR).This RRR is based on:

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Any of the above measures can be used to set a RRR. The choice of which measure to use will depend on the entity's specific circumstances and objectives. Industry averages could be used to determine a competitive return, past performance could be used to set a benchmark for improvement, and returns from other investments outside the industry could be used to compare the risk and return of potential investments.

Most Entities,when Making an Investment Decision Using the ARR Method,will