Accounting rate of return method, finance, Other Engineering

Accounting rate of return method
ARR method is also known as ‘Return on Investment Method’. Here accounting information as shown in the financial statement is the basis for measuring the profitability of an investment (I.M. Pandey, 2005).
Average Income
ARR = ________________________
Average Investment
Accept Reject Rule:
Accept if the projects ARR > Minimum Required Rate
Reject if the projects ARR < Minimum Required Rate (I.M. Pandey, 2005).
1. Simple to understand and use
2. Readily calculated by referring to financial statements
3. Considered entire income in calculating the profitability
1. It uses accounting profits and not the cash flows in evaluating a project.
2. Time value of money is ignored as average income is taken (I.M. Pandey, 2005).
Posted Date: 2/6/2012 10:37:03 PM | Location : United States

Related Discussions:- Accounting rate of return method, finance, Assignment Help, Ask Question on Accounting rate of return method, finance, Get Answer, Expert's Help, Accounting rate of return method, finance Discussions

Write discussion on Accounting rate of return method, finance
Your posts are moderated
Related Questions
Signal modulation Modulation involves the modification of some property of a (usually sinusoidal) carrier waveform. The process of recovering the original signal from the modul

The phugoid is a relatively low-frequency oscillation in which kinetic and potential energies are exchanged. The mode is generally characterized by low damping and approximately co

I need the answers of these three problems. 1. How much money would be in a savings count that started with a deposit of $2,000 in year 1 with each succeeding amount increasing by

Here, it is assumed that the crack is effectively longer than the value measured on the side of the specimen. If one assumes that it is longer by an amount Δ, then the new crack le

how can I improve my G+4 apartment with rendering with pen and ink

Techniques of capital budgeting There are a number of capital budgeting techniques used in the evaluation of a project. They are broadly classified under two categories: 1] Discoun

What Is EBIDTA?  EBITDA appears for income before attention, taxation, devaluation, and amount. EBITDA came into large use among personal investment companies, seeking to determ

#What are the types of pumps used in oil industry? How to perform fault finding report?

Real time processing is suitable when it is necesssary to have the latest information in the following types of business operations