Consider the advantages and disadvantages of using the accounting rate of return as an investing criteria
Q: Does the accounting (book) rate of return (ARR) method provide a valid (or, meaningful) measureof…
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Q: What is the accounting rate of return?
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Q: Give an example of a strength and a weakness of the accounting rate of return approach.
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Consider the advantages and disadvantages of using the accounting rate of
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- Explain what is meant by Accounting Rate of Return (ARR) and Net Present Value (NPV) in the context of investment appraisal. Discuss at least TWO advantages and TWO disadvantages of each method.The following are investment criteria: net present value, payback, profitability index, average accounting return, and the internal rate of return. Question: Which one of these is the most valuable from a financial point of view, and why? (Answer the question correctly and in-depth.)Explain the meaning and composition of the "return" of a financial investment.
- Does the accounting (book) rate of return (ARR) method provide a valid (or, meaningful) measureof the return on investment? How about the investment’s internal rate of return (IRR)?Demonstrate the link between net present value and internal rate of return and how they may be used in conjunction with one another to evaluate investments.(b) Explain the relationship between net present value and internal rate of return, and show how they may offer complementary methods for evaluating investments.
- Which of the following decision criteria is the easiest to use and very popular among investors? O Payback period. O Internal rate of return. O Average accounting return. Net present value. O Discounted return on investment.Describe the rules of accounting rate of return.Explain the difference between the financial statement approach and the valuation approach. Which approach is superior for making short-term financial decisions? and why?