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).
Merits:
1. Simple to understand and use
2. Readily calculated by referring to financial statements
3. Considered entire income in calculating the profitability
De-merits:
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
Blow Holes                    (i) Excessive moisture in the moulding sand.                   (ii) Low permeability and excessive fine grain sands.                   (iii

how to crate pareto charts eith matlab?

I am looking for a circuit similar to a schmitt trigger which use a varying capacitive input and provided a varying frequency output.

Calculate the maximum range when radar operates at 10GHz and has peak power=10 Mwatt,S/N ratio=10dB,antenna cross section=100 mm2,target cross section=10mm2.The gain of transmittin

square wave generator using op amp

i need 3 areasof application of lunear programming

what is meant by VMOS

VARIATION OF ENERGY BAND GAP WITH ALLOY COMPOSITION

young''s modulus by uniform bending

Modified Accelerated Cost Recovery System (MACRS) Although SLN is the most commonly used depreciation method in the U.S. for purpose of financial reporting, MACRS is the only