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[DOC File]CAPITAL BUDGETTING - LSP4YOU
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Average Rate of Return Method (ARR Method or Accounting Rate of return) This method takes into account the earnings expected from the investment over the entire life time of the asset. The project with the higher rate of return is accepted. ARR = Average annual earnings x 100. Average investment . Average earnings = total earnings . Number of years
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[DOC File]Fadhil Consultancy and Training
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Additionally, if projects have the same capital costs and total earnings, but different lives, the Accounting Rate of Return method automatically favours projects with short lives and large returns in the early years. Methods of Project Evaluation. PAYBACK PERIOD. Strengths. Simple to …
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File: chap10, Chapter 10
A. Payback method . B. Accounting rate of return. C. Net present value . D. Internal rate of return . E. None of the above. Ans: A . Page: 189. 23. Which of the cash flow reporting methods does not take the time value of money into account? A. Payback method --- does not. B. Accounting rate of return ---- …
accounting rate of return method pdf

[DOC File]CHAPTER 1
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The accounting rate-of-return method focuses on the financial reporting effects of a capital investment rather than on the investment’s cash flows. It uses two variables to measure performance: estimated annual net income from the project and average cost of the investment. The basic equation is as follows:
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[DOC File]CHAPTER 21
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The other methods presented are the payback method and the accrual accounting rate-of-return. The payback method does use cash flow as a basis but does not incorporate time value of money nor profitability. The accrual accounting rate-of-return does not focus on cash flow but uses measures from the income statement.
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[DOC File]Chapter 14—Capital Budgeting - CPA Diary
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a. payback method b. accounting rate of return c. net present value method d. internal rate of return ANS: D DIF: Easy OBJ: 14-4. 48. If the discount rate that is used to evaluate a project is equal to the project's internal rate of return, the project's _____ is zero.
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[DOC File]Student lecture notes - Pearson Education
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Payback method. Accounting rate of return. Net present value method. Data. A haulage company has three potential projects planned. Each will require investment in two refrigerated vehicles at a total cost of £120,000. The vehicle has a three-year life. The three projects are:
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Accounting rate of return method