Managerial Accounting

Free Version

Upgrade subject to access all content


How is IRR Similar to AARR?


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

Highlight Answer(s) Below

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.