Accrual accounting rate of return method

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Accrual accounting rate of return method (AARR method) is capital budgeting method that divides an accrual accounting measure of average annual income of a project by an accrual accounting measure of its investment. See also return on investment (ROI).

Definitions

According to Cost Accounting by Horngren, Datar, Rajan (14th edition),

Accrual accounting rate of return method (AARR method). Capital budgeting method that divides an accrual accounting measure of average annual income of a project by an accrual accounting measure of its investment. See also return on investment (ROI).
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