0
Want this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
Limitation of accounting rate of return?
outline four limitation of the accounting rate of return method of appraising new investment.
The accounting rate of return on stockholders investments is measured by?
The accounting rate of return stockholders investments is measured by?
Are accounting rate of return and payback period non discount cashflow methods?
YES
What are the limitations of accounting rate of return?
The AAR is good capital budgeting tool because managers can compare it to objective benchmarks. Yet one limitation is that ARR uses profit rather than cashflows, and it does not account for the time value of money (TVM)For more information on the accounting rate of return (AAR) please visit: http://www.drtaccounting.com/2008/03/calculate-average-accounting-return.html
What is the cut off point for accounting?
Businesses attempt to estimate the possible income received by certain transactions. They then compare this amount to the necessary rate of return on the investment. Every investment has a necessary return (usually enough so the company doesn't lose money in the investment). The cutoff point, therefore, is the minimum rate of return. If a company invests in something with a projected 15% rate of return, but the minimum rate of return is 20%, then the company is better off not investing.
Limitation of accounting rate of return?
outline four limitation of the accounting rate of return method of appraising new investment.
What are the three capital expenditure techniques?
Internal rate of return, net present value, accounting rate of return and payback method.
What are the differences between accounting rate of return and internal rate of return?
Internal rate of return (IRR) is a discounted method used for Capital budgeting decisions (investment etc) while accounting rate of retun is a measure for calculating return for a one off payment. IRR is actually the discount rate that equates the Present value of the cash flows to the NPV of the project (investment) while accounting rate of return just gives the actual rate of return. Habib topu1910@gmail.com
The accounting rate of return on stockholders investments is measured by?
The accounting rate of return stockholders investments is measured by?
A major advantage of the annual rate of return method is that it considers the time value of money True False?
TRUE
How is the accounting rate of return on stockholders investments measured?
return on equity
Why it is interpollation used in internal rate of return method?
Interpolation method is used to know the exact point or rate of return where NPV(net present value) of investments is zero.
Are accounting rate of return and payback period non discount cashflow methods?
YES
Why you use average invetsment in accounting rate of return technique?
If the investment is derived from income, look at the return and make a choice
True or FalseBoth the IRR rule and the accounting rate of return rule take into consideration the time value of money?
accounting rate of return not take into consideration the time value of money as regrading to actual financial statements which prepare on the historical cost
How Exampes of Accounting Rate of Return - ARR?
Year Net Income Net Cash Flow 0 0 (98500) 1 7500 24750 2 95000 31000 3 14750 34000 4 21250 40250 5 24950 44500 calculate accounting rate of return?
When using the net present value method for evaluating an investment an increase in the required rate of return will?
The increase in rate of return will make the investment more difficult to be accepted.
