Accounting rate of return method, finance, Other Engineering

Accounting rate of return method, finance, Other Engineering

Assignment Help:

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).

Related Discussions:- Accounting rate of return method, finance

Electrometallurgy, explain electrometallurgy for metal extraction process u...

explain electrometallurgy for metal extraction process using a schematic diagram

Various stages of creep, Q. Explain various stages of creep? Ans. CREE...

Q. Explain various stages of creep? Ans. CREEP: Creep can be defined as the process by which plastic flow occurs when a constant stress or load is applied to a material for a

Finance help, After five years, what is Judy’s total income (interest par) ...

After five years, what is Judy’s total income (interest par) from each bond? Should she use this total as a way of deciding which bond to purchase?

Describe the processes of a cdma system, Question: (a) Describe the spr...

Question: (a) Describe the spreading and dispreading processes of a CDMA system. (b) Autocorrelation properties are used to recover the signals correctly at the receiver. Ex

Sas software, I need assistance in SAS software based stats questions, can ...

I need assistance in SAS software based stats questions, can you provide me solution?

Binary cycle, Consider the binary cycle using the sodium and steam/water in...

Consider the binary cycle using the sodium and steam/water in the sketch below and operating at conditions in Table 1. Draw T S Diagram and find the thermal cycle efficiency

Financial econometric , need solution in Financial econometric, Do you have...

need solution in Financial econometric, Do you have an expert in Financial econometric

Frequency warping, main difference between warping and without warping

main difference between warping and without warping

Working of bootstrap sweep circuit, Working of bootstrap sweep circuit?

Working of bootstrap sweep circuit?

Structural engineering, The closed form solutions for ?max and Mmax are giv...

The closed form solutions for ?max and Mmax are given on page 16.1-276 for several axial loads. Figure C-C2.2 summarizes the results for the first benchmark problem and Figure C-C2

Write Your Message!

Name

Email id

Message

Verfication Code

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd