Question

Which of the following statements concerning the average accounting return is (are) correct?

I. The information used in the AAR calculation is easily obtainable.
II. A project is accepted if the target AAR exceeds the project AAR.
III. The AAR ignores the time value of money.
IV. The AAR is based on cash flows and market values.
A) I only
B) I and III only
C) I and II only
D) I, III, and IV only
E) III and IV only

Answer 1

The correct statements concerning the average accounting return (AAR) are that the information used in the AAR calculation is easily obtainable, the AAR ignores the time value of money, and the AAR is based on cash flows and market values.

Step-by-step explanation:

The correct statements concerning the average accounting return (AAR) are:

1. I. The information used in the AAR calculation is easily obtainable.
2. III. The AAR ignores the time value of money.
3. IV. The AAR is based on cash flows and market values.

Therefore, the correct answer is D) I, III, and IV only.