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

Diagonal relationship, Diagonal relationship betweent lithium and aluminium...

Diagonal relationship betweent lithium and aluminium

Risk Management, discuss the values of risk analysis and how it can help in...

discuss the values of risk analysis and how it can help in decision making of project management under conditions of uncertainty

Aad instruction, Ask question #Minimum 100 words acexplanation of aad with ...

Ask question #Minimum 100 words acexplanation of aad with examplescepted#

Introduction for cost reduction and cost control, Write question here...i w...

Write question here...i want all the techniques objectives tools used limitations for cist control and cost objectives

Matlab, program how to estimate the inner curve using spline interpolation

program how to estimate the inner curve using spline interpolation

Clipping circuit, Disadvantage of shunt diode clipper

Disadvantage of shunt diode clipper

Laws of chemical combination, FeCl+NaOH

FeCl+NaOH

Communication engineering, I am preparing for a seminar ... but I am search...

I am preparing for a seminar ... but I am searching for a very good topic. Can you help me to get a topic in wireless communication . i want to know what are the latest technologie

Classification of plastic, Q. Discuss the classifications of plastics. ...

Q. Discuss the classifications of plastics. OR Discuss the general properties and classification of plastics.

Thin-skinned structures , Thin-skinned Structures The SCB geometry can...

Thin-skinned Structures The SCB geometry can't be used because the skins are too flexible. Instead, a centre-notch flexure (CNF) test can be used. A hole is drilled abo

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