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Managerial Accounting

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How is IRR Similar to AARR?

MGRACT-41SO$Z

How is the internal rate of return (IRR) method similar to the accrual accounting rate of return (AARR) in capital budgeting projects?

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Both estimate future cash flows using formal appraisals. Both use after-tax cash flows to compute their result. Both are expressed as percentages. Both ignore income taxes. Neither considers the initial investment.