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  • Average Rate of Return

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    Anirudh Jain
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    The average rate of return expresses the profits arising from a project as a percentage of the initial capital cost. The main advantage of ARR is its simplicity. This makes it relatively easy for managers to understand.

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    The average rate of return expresses the profits arising from a project as a percentage of the initial capital cost. The main advantage of ARR is its simplicity. This makes it relatively easy for managers to understand.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
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    7 views2 pages

    Average Rate of Return

    Uploaded by

    Anirudh Jain
    The average rate of return expresses the profits arising from a project as a percentage of the initial capital cost. The main advantage of ARR is its simplicity. This makes it relatively easy for managers to understand.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Average Rate Of Return

    ‡ The average rate of return expresses the profits arising from a project as a percentage of the initial capital cost. ‡ One of the most common approach is as follows: ARR = (Average annual revenue / Initial capital costs) * 100

    Advantages:
    ‡ The main advantage of ARR is its simplicity. This makes it relatively easy to understand. ‡ The ARR is expressed in percentage terms and this, again, may make it easier for managers to use.

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