5. What is the difference between the payback period and the discounted payback? 6. Define the Average...

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Finance

5. What is the difference between the payback period and thediscounted payback?
6. Define the Average Accounting Return (AAR). What are thedisadvantages of the AAR?
7. What is the Internal Rate of Return (IRR)? What is the IRRrule? How is the IRR calculated?
8. Do the NPV rules and IRR rules lead to identical investmentdecisions? If so, under what circumstances?

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5 The difference between payback and the discounted payback is that the discounted payback period takes into account the time value of money hence it is a more reliable measure 6 The AAR is calculated as the Net income initial cost of the asset It decides which project to See Answer

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5. What is the difference between the payback period and thediscounted payback?6. Define the Average Accounting Return (AAR). What are thedisadvantages of the AAR?7. What is the Internal Rate of Return (IRR)? What is the IRRrule? How is the IRR calculated?8. Do the NPV rules and IRR rules lead to identical investmentdecisions? If so, under what circumstances?