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

New assembly buildings - fire protection engineering, N e w Assembly Buil...

N e w Assembly Buildings: 12.1.1.1 The requirements of this chapter shall apply to new buildings or portions thereof used as an assembly occupancy. 12.1.3.2 Simultaneous

Data communiction & networking., give the subject on data communiction & n...

give the subject on data communiction & networking.

Damping coefficint of canatrd of aircraft, what will be the methodology to ...

what will be the methodology to calculate pitching moment damping coefficient of canrad of aircraft

Working of i.c. engine, WORKING OF I.C. ENGINE Basically there are 2 ty...

WORKING OF I.C. ENGINE Basically there are 2 types of internal combustion engines; the two stoke type and the 4-stroke type. A brief description of these is given below: 1.

Do you have fire engineer??, Do you have fire engineer??

Do you have fire engineer??

Zeroth law of thermodymanics, Explain with the aid of sketch of zeroth law ...

Explain with the aid of sketch of zeroth law of thermodynamics

Materials, Why Industries that manufacture racing cars prefers nickel based...

Why Industries that manufacture racing cars prefers nickel based alloys for engine components and iron based alloys for structural parts?

Introduction to Corporate Finance, Calculatethe tax disadvantage to organiz...

Calculatethe tax disadvantage to organizing a U.S. business today, after passage of the Jobs and growth Tax relief reconciliation act of 2003, as a corporation versus a partnership

Shelf list filing - library management, Shelf List Filing Shelf list ...

Shelf List Filing Shelf list reflects the arrangement of documents in the library. That is to say, the classificatory arrangement of the documents in a library can be seen th

Mechanics, an electric bulb weighing 15n hangs from a point C by 2 strings ...

an electric bulb weighing 15n hangs from a point C by 2 strings AC and BC .string AC is inclined at 60degree to horizontal and BC at 45 degree to vertical.find tension in string.

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