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

Origin-destination matrix, (a) Explain briefly any five roadway elements. ...

(a) Explain briefly any five roadway elements. Include function and current practices used in the design of these elements. (b) Discuss any three emerging (i.e. 'Intelligent T

Modulus of rupture, description about modulus of rupture machine & differen...

description about modulus of rupture machine & different parts of bending strength machine

Electronics., Limitations of shunt clippers

Limitations of shunt clippers

Matlab, 2. Write a MATLAB program to perform discounted reward value iterat...

2. Write a MATLAB program to perform discounted reward value iteration. Show me the MATLAB code and also an output from your code for solving the problem provided in the data above

Auxiliary power unit oil system, Auxiliary power unit oil System: A sum...

Auxiliary power unit oil System: A sump at the bottom of the gearbox collects the returning oil, in some APU's the rear face of the sump is finned and let into the intake plenu

What is eft?, What Is EFT? EFT is short for Electronic Funds Transfer in...

What Is EFT? EFT is short for Electronic Funds Transfer in finance. An EFT is a method of transferring money from one bank account directly to another account without any paper

Compositional defects, Q. Explain the compositional defects. Ans. ...

Q. Explain the compositional defects. Ans. Compositional Defect: This defect due to (a) Alloying an element to original crystal. (b) Impuring atom during origi

Chemistry, explain elecrochemical series and give its applications

explain elecrochemical series and give its applications

Doble titration, object:THE NORMALITY OF STANDARD FAS SOLUTION(A)N/50.find ...

object:THE NORMALITY OF STANDARD FAS SOLUTION(A)N/50.find out the strenghth and normality of fas(b) using potasium permagnettetraoxide as intermidiate compound & self indicator

Blade twist - aircraft engine, BLADE TWIST: Rotational velocity and its...

BLADE TWIST: Rotational velocity and its effect on the Angle of Attack depends on the radius of the blade element in question. A blade element near the blade root (hub) will h

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