Accounting rate of return method or arr, Finance Basics

Assignment Help:

Accounting Rate of Return Method or ARR

This method utilizes accounting profits from financial status to assess the viability of investment proposal via diving the average income after tax via average investment.  The investment would be equivalent to the original investment in addition the salvage value divided with two or the initial investment divided with two or dividing the total of the investment book value after depreciating with the life of the project.  This method is known as also book value method or financial statement method.  The rate of return on asset method or adjusted rate of return method is given via:

ARR = ( Average income/ Average investment)    x 100 

or (Average income - Average depreciation)/Initial investment

Not like PBP, this method will ascertain the profitability of an investment and it will provide results that are consistent along with those given via return ratios.


Related Discussions:- Accounting rate of return method or arr

Project apparisal, challenges your likely to face when apparising a project...

challenges your likely to face when apparising a project on the implemtation stage

Mony and finance, mony is differnt from wealth and income

mony is differnt from wealth and income

Lock-box system, Lock-Box System In a lock-box system, the customer se...

Lock-Box System In a lock-box system, the customer sent the payments to a post office box. The post office box is emptied with the firm's bank at minimum once or twice all bus

Bank draft, what is bank draft?How it can be prepared?

what is bank draft?How it can be prepared?

Income statement-balance sheet and cash flow, Looking at the income stateme...

Looking at the income statement, balance sheet and cash flow statement of the company and relating it with the non financial factors, I have the important observations as below:-

Private limited companies, Private Limited Companies These are NOT per...

Private Limited Companies These are NOT permitted to advertise their shares so like to attract public money and so that they sell their shares privately as recognized as priva

Characteristics of sole proprietorship, Characteristics of sole proprietors...

Characteristics of sole proprietorship The main characteristics of sole proprietorships are as follows: 1) Ownership- The ownership of the business unit is by one person.

Vincent mind set, if u were the professor wht your opinion about vincent mi...

if u were the professor wht your opinion about vincent mind stage

Explain performance budgeting and zero base budgeting, Write short notes on...

Write short notes on the following: a) Performance budgeting b) Zero base budgeting c) Factors affecting dividend decisions d) Accrual concept

Please help!!, The following information pertains to Fairways Driving Range...

The following information pertains to Fairways Driving Range, Inc.: The company is considering operating a new driving range facility in Sanford, FL. In order to do so, they will

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