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

Basic electronics, Q 1.what is the difference between BJT and FET.What is B...

Q 1.what is the difference between BJT and FET.What is Biasing?Discuss abt diffrent Biasing techniques?Write the advantages and Volatage divider biasing over other biasing?what is

Density correction factor, superheated steam flow measurement please provid...

superheated steam flow measurement please provide formula used for density correction factor

Heat conduction on a cooling fin, on metlab

on metlab

Risk assement in power system, can we minimize the risk ?

can we minimize the risk ?

Choked nozzle and thrust correction - turbojet, Choked Nozzle Consideri...

Choked Nozzle Considering the formula for thrust under "choked" nozzle conditions: Thrust =(P-P 0 )A + WV j /g Where: P = Pressure P = Ambien

Microprocessor, software development cycle for 8086

software development cycle for 8086

Discrete math, Need homework help

Need homework help

1 year engg, state and explain varignons theorem

state and explain varignons theorem

Aerospace propulsion systems, Aerospace propulsion is essentially based on ...

Aerospace propulsion is essentially based on Newton'slaws of motion (1687): • A body on which there is no resultant force will move ina straight line with constant velocity.

Survey, Operations invending in chain survey

Operations invending in chain survey

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