Which of the following is a limitation of AARR method?
A) It is difficult to compare projects as its result is expressed in dollars and not in percentage terms.
B) It does not consider income earned throughout a project's expected useful life.
C) It does not track initial investment.
D) It does not consider time value of money.

Question

Quizplus · Accepted Answer

AARR method does not consider time value of money, which is a significant limitation. This means that the method does not take into account the fact that a dollar received in the future is worth less than a dollar received today. Therefore, the AARR method may overestimate the value of a project, making it difficult to rely on the results for making investment decisions. The other options (A, B, and C) are not limitations of AARR method.

Which of the Following Is a Limitation of AARR Method