An investment is acceptable if its average accounting return (AAR):
A)is less than a target AAR.
B)exceeds a target AAR.
C)exceeds the ﬁrm's return on equity (ROE).
D)is less than the ﬁrm's return on assets (ROA).
E)is equal to zero.

Question

Quizplus · Accepted Answer

An investment is acceptable if its average accounting return (AAR) exceeds the target AAR. A higher AAR indicates a higher profitability of the investment, which is desirable for the firm.

An Investment Is Acceptable If Its Average Accounting Return (AAR)