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EnglandAccountingQuick questions
3.2 Management accounting
Quick questions on Capital investment appraisal: payback, ARR and net present value - AQA A-Level Accounting
2short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is q1?Show answer
A project costs and returns a year. Calculate the payback period. [2 marks] years.
What is q2?Show answer
Explain why NPV is often preferred to ARR. [3 marks] NPV accounts for the time value of money and uses all the cash flows, whereas ARR ignores timing and uses accounting profit.
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