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ARR stands for Accounting Rate of Return. Information can be found about this from many websites including Money Terms. Financial Dictionary also provides information.

Q: Where can one find information about Arr?
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ARR stands for Accounting Rate of Return. Information can be found about this from many websites including Money Terms. Financial Dictionary also provides information.

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The accounting rate of return (ARR) method may be known as the return on capital employed (ROCE) or return on investment (ROI).

The ARR is ratio of the accounting profit to the investment in the project, expressed as a percentage.

The decision rule is that if the ARR is greater than, or equal to, a hurdle rate, then accept the project.

Advantages:- familiarity, ease of understanding and communication;

- managers' performances are often judged using ARR and therefore wish to select projects on the same basis.

Disadvantages:- it can be calculated in a wide variety of ways;

- profit is a poor substitute for cash flow;

- no allowance for the time value of money;

- arbitrary cut-off date;

- some perverse decisions can be made.

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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?

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The accounting rate of return stockholders investments is measured by?

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Average rate of return=Average profit /Initial investment*100%

or

ARR=Average profit /Average investment*100%

or

ARR=Total profit /Initial Investment*100%

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