Accounting rate of return (arr), Financial Management

Assignment Help:

Accounting Rate of Return (ARR):

This technique relies on the rate of return every project will earn over its life. It takes the help of accounting profit while calculating the returns.  There are 2 methods of calculating ARR.

(i)                 On the basis of original investment,

1701_accounting rate of return.png

This technique of calculation was rejected on the ground that the original outlay is gradually recovered over the project life because of depreciation charge.

904_accounting rate of return1.png

When depreciation is to be taken on a straight-line basis and no salvage value is understood, the average investment is always equal to one-half of the original in- vestment, and the resulting rate of return is always two times the rate determined on the basis of original investment.


Related Discussions:- Accounting rate of return (arr)

Show the working capital forecasting techniques, Q. Show the Working Capita...

Q. Show the Working Capital Forecasting Techniques? Working Capital Forecasting Techniques or else Computation Of Working Capital: - A number of processes are used to determine

Brainstorming, Brainstor ming An idea production strategy that exc...

Brainstor ming An idea production strategy that exclusively encourages any and all alternatives while withholding any appreciation of those options.

Bse-500 and sectoral indices, BSE-500 and Sectoral Indices On August 9,...

BSE-500 and Sectoral Indices On August 9, 1999, another new index was introduced in the market which was based on the data of 500 companies and designated as BSE-500 index. It

Financial management, using the operating cycle and any other financial man...

using the operating cycle and any other financial management knowledge,discuss the applicability of such cycle to poultry business in Uganda(consider broilers)

IFM, 38. The optimum capital structure is the one with i) highest value of ...

38. The optimum capital structure is the one with i) highest value of the firm ii) Lowest value of the firm iii) highest shares in numbers iv) highest debt

Illustrate miller-orr model recognises, Q. Illustrate Miller-Orr model reco...

Q. Illustrate Miller-Orr model recognises? The Miller-Orr model recognises which cash balance requirements are likely to fluctuate and that active management is required in r

Calculate the capital charge for the bank, A bank comprises a $500 million ...

A bank comprises a $500 million portfolio of investments and bank credits. The everyday standard deviation of return on this portfolio is .666 %. Capital adequacy standards need th

Expalin the term company objectives, Expalin the term Company Objectives ...

Expalin the term Company Objectives Financial management is anxious with making decisions about the provision and use of a firm's finances. A rational method to decision-making

Commercial mortgage-backed securities (cmbs), These securities are ...

These securities are backed by income-producing real estate, usually in the form of warehouses, shopping centers, apartments, office buildings, senior housi

Specialized stock indexes, Specialized Stock Indexes The most regularly...

Specialized Stock Indexes The most regularly quoted market indices are those that include the stocks of the largest listed companies on a nation's largest stock exchange. Examp

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