Capital Market Question: Download Capital Market PDF
What is Accounting rate of return?
Answer:
Accounting rate of return is also know as Average rate of return which gives the financial ratio used in capital budgeting. The ratio takes time value of money factor which calculates the return and the net income can be generated from the proposed capital investment. It is used to show the percentage return. The formula of computation is:
ARR= Average profit/average investment
ARR= Average profit/average investment
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