Question: Why might the Average Accounting Return ( AAR ) method conflict with the NPV method when evaluating a project? AAR considers inflation, while NPV does
Why might the Average Accounting Return AAR method conflict with the NPV method when evaluating a project?
AAR considers inflation, while NPV does not
AAR is based on cash flows, while NPV is based on accounting profits
AAR ignores the time value of money, which can distort longterm project assessments
NPV lacks any benchmark for comparison
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