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

PLC, True or False, In a PLC system, there is a physical connection between...

True or False, In a PLC system, there is a physical connection between field input devices and output devices.

Organic, What happened when melonic acid heated

What happened when melonic acid heated

Effect of precipitate particles in strengthening, Q. Discuss the role of pr...

Q. Discuss the role of precipitate particles, strengthening crystalline materials against yield as low as well as high temperature of deformation. Ans. Effect of precipitate p

Counter, Design a recycling MOD 19 up counter using JK FFs. In your design,...

Design a recycling MOD 19 up counter using JK FFs. In your design, include the logic circuit diagram and the timing diagram output that counts from 000002 = 010 to 100112 = 1910. C

Working capital, 5. From the following details you are required to make an ...

5. From the following details you are required to make an assessment of the average amount of working capital requirement of Hindustan Ltd. Particulars Average period of credit E

Assembly buildings - fire risk assessment, Assembly buildings: Assembl...

Assembly buildings: Assembly buildings are high life risk premises.  People often very densely occupy such buildings and they do so in large numbers so they must be given good

Environemental, How to Compute the carbon per mile for the car

How to Compute the carbon per mile for the car

Write Your Message!

Captcha
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!

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