Question

The strength of the average accounting method of project analysis is the fact that they are does way

Answer 1

The strength of the average accounting return (AAR) method of project analysis is the fact that they are easy to calculate. It is calculated by dividing it's average earning by the average amount invested.

Average accounting return is a technique used in Capital Budgeting to analyse the proposed project. It helps business to decide whether to accept or reject the project. For example, if a project requires an investment of $1,00,000 and average annual income of $10,000, it's Average Accounting return will be 10%.