Evaluate the applicability of the ARR method in investment decision-making.
Understand the Problem
The question is asking to evaluate the applicability of the ARR (Average Rate of Return) method in investment decision-making, providing multiple-choice options to specify its suitability for different types of investments.
Answer
B
The most appropriate applicability is B. ARR is suitable for long-term investments with consistent profits.
Answer for screen readers
The most appropriate applicability is B. ARR is suitable for long-term investments with consistent profits.
More Information
ARR is suitable for assessing investments with consistent annual profits, as it does not account for the time value of money.
Tips
Avoid using ARR as the sole indicator for decisions involving varying cash flows over time.
Sources
- Accounting Rate of Return (ARR): Formula and Examples - highradius.com
- What Is Accounting Rate of Return (ARR)? - Investopedia - investopedia.com
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