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Question: What is the accept or reject criterion for accounting rate of return method?
Answer: Under this method, all projects, having Accounting rate of return higher than the minimum rate established by management will be considered and those having ARR less than the predetermined rate will be rejected. This method ranks a project as number one, if it has highest ARR, and lowest rank is assigned to the project with the lowest ARR.
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Investment Decisions Interview Questions & Answers -
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Question:
What is the accept or reject criterion for accounting rate of return method?
Answer:
Under this method, all projects, having Accounting rate of return higher than the minimum rate established by management will be considered and those having ARR less than the predetermined rate will be rejected. This method ranks a project as number one, if it has highest ARR, and lowest rank is assigned to the project with the lowest ARR. Source: CoolInterview.com
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