Accounting Rate of Return (ARR) | Example 2 | Explained with Example

In this lesson, we go through a second example of the Accounting Rate of Return (ARR). We explain what it is, why it is calculated, and the formula for the Accounting Rate of Return (ARR) when you are given uneven cash flows as well as a thorough example. We show how to go from cash flows to profits. We also go through the advantages and disadvantages of the Accounting Rate of Return (ARR).

Timestamps:
Accounting Rate of Return Definition: 00:00
Interpret / Analyze the Accounting Rate of Return: 01:02
Accounting Rate of Return Formula: 01:42
Advantages and Disadvantages of the Accounting Rate of Return: 09:15

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[greatnessurey]

In the case there's no salvage value. What do I do?

[danielamornortey]

What if you were giving cashflow and initial investment and cost of capital in percentage

[phumlilekhumalo-izxg]

What if you haven't been given the depreciation percentage, the how to calculate profits from cash flows

[blizz]

So i have a question, i was given resale value and disposal value, can i get depreciation from that

[kalindinaidoo]

What if you don't get depreciation or scrap value in the question and you only get Cash Flows? How do you calculate Profit?

[winnieadhiambo]

Hello we have some questions where we're not given given salvage

[aweleogweh]

what of if they give you tax rate and you have a mutually exclusive project

[jordanaduncan]

i am confused with the question that i have. if the figures i was given are expected profits per annum, do i still calculate depreciation on these figures? and if i am doing so, is it possible to get negative figures? (when calculated, the depreciation is greater than the expected profit figures per annum)...help! :(

[yourgirlstyebrooke]

I always thought Average investment=(initial investment - salvage value)/2