Average accounting return employs some sort of arbitrary value against which the project measurement must be compared when determining whether to accept or reject a project.

Question

Quizplus · Accepted Answer

The Average Accounting Return (AAR) method compares the average project earnings to a predetermined target or benchmark return, which can be considered arbitrary since this target is set by the company and may not reflect market or economic conditions.

Average Accounting Return Employs Some Sort of Arbitrary Value Against