“…We also analytically elaborate the structural differences between these two methods. Furthermore, we can show which theoretical arguments favour the annuity method; however, whether market 2 The discussion of the conditions under which the accounting rate of return (ARR) coincides with the internal rate of return (IRR) (see, among others, Solomon, 1966;Vatter, 1966;Livingstone and Salamon, 1970;Stauffer, 1971;Gordon, 1974;Kay, 1976;Leech, 1976;as well as Peasnell, 1982; for an overview see Luckett, 1984;and Stark, 2004) is somewhat structurally analogous to our research. However, although this discussion arises out of given cash flows and elaborates the conditions of, inter alia, the depreciation method under which ARR equals IRR and focuses on an ex post evaluation of (periodic) performance, our starting point is considering regulatory objectives.…”