The calculation of ARR (Accounting rate of return ), the information that the measure gives about the series of cash flow and the decision rule criteria of AAR Introduction: The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

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Answer 1

Question

Chapter 9, Problem 5CRCT

a)

Summary Introduction

To discuss: The calculation of ARR (Accounting rate of return), the information that the measure gives about the series of cash flow and the decision rule criteria of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

b)

Summary Introduction

To discuss: The problems while using AAR to assess the cash flows, the most troubling feature of AAR and the redeeming qualities of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

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Students have asked these similar questions

29. Which one of the following statements is correct regarding capital Investment appraisal methods?a) The Payback period takes into account all the cash flows accruing to the projectb) The Net Present value method does not take the time value of money into accountc) The Accounting Rate of Return takes the time value of cash flows into consideration and is the one most often used in practice by business organisationsd) The Internal Rate of Return is the discount rate at which the net present value is zero

H5. Discuss the following statement: If a firm has only independent projects, a constant WACC, and projects with normal cash flows, the NPV and IRR methods will always lead to identical capital budgeting decisions. What does this imply about the choice between IRR and NPV? If each of the assumptions were changed (one by one), how would your answer change? Explain with details

6.2 (q5) Which of the following is NOT a definition of the internal rate of return of a project? Select one: a. The average profit over the life of a project based on the depreciated book value of the assets used in the project. b. The discount rate that results in an NPV for the project of zero. c. The rate of return on invested capital, based on cash flows and taking into account the time value of money. d. None of the above. (In other words, all of the above ARE definitions of the internal rate of return of a project.) Clear my choice

Answer 2

Question

Chapter 9, Problem 5CRCT

a)

Summary Introduction

To discuss: The calculation of ARR (Accounting rate of return), the information that the measure gives about the series of cash flow and the decision rule criteria of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

b)

Summary Introduction

To discuss: The problems while using AAR to assess the cash flows, the most troubling feature of AAR and the redeeming qualities of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

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Answer 3

Question

Chapter 9, Problem 5CRCT

a)

Summary Introduction

To discuss: The calculation of ARR (Accounting rate of return), the information that the measure gives about the series of cash flow and the decision rule criteria of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

b)

Summary Introduction

To discuss: The problems while using AAR to assess the cash flows, the most troubling feature of AAR and the redeeming qualities of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 5CRCT

a)

Summary Introduction

To discuss: The calculation of ARR (Accounting rate of return), the information that the measure gives about the series of cash flow and the decision rule criteria of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

b)

Summary Introduction

To discuss: The problems while using AAR to assess the cash flows, the most troubling feature of AAR and the redeeming qualities of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 5CRCT

a)

Summary Introduction

To discuss: The calculation of ARR (Accounting rate of return), the information that the measure gives about the series of cash flow and the decision rule criteria of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

b)

Summary Introduction

To discuss: The problems while using AAR to assess the cash flows, the most troubling feature of AAR and the redeeming qualities of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

Answer 6

Chapter 9, Problem 5CRCT

a)

Summary Introduction

To discuss: The calculation of ARR (Accounting rate of return), the information that the measure gives about the series of cash flow and the decision rule criteria of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

Answer 7

Chapter 9, Problem 5CRCT

a)

Summary Introduction

To discuss: The calculation of ARR (Accounting rate of return), the information that the measure gives about the series of cash flow and the decision rule criteria of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

Answer 8

b)

Summary Introduction

To discuss: The problems while using AAR to assess the cash flows, the most troubling feature of AAR and the redeeming qualities of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

Answer 9

b)

Summary Introduction

To discuss: The problems while using AAR to assess the cash flows, the most troubling feature of AAR and the redeeming qualities of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 9.1 - Prob. 9.1ACQ Ch. 9.1 - Prob. 9.1BCQ Ch. 9.2 - Prob. 9.2ACQ Ch. 9.2 - Why do we say that the payback period is, in a...Ch. 9.3 - Prob. 9.3ACQ Ch. 9.3 - What advantage(s) does the discounted payback have...Ch. 9.4 - What is an average accounting rate of return...Ch. 9.4 - What are the weaknesses of the AAR rule?Ch. 9.5 - Prob. 9.5ACQ Ch. 9.5 - Is it generally true that an advantage of the IRR...

Solution Summary: The author explains how the average accounting rate (AAR) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

To discuss: The problems while using AAR to assess the cash flows, the most troubling feature of AAR and the redeeming qualities of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

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Chapter 9 Solutions

Solution Summary: The author explains how the average accounting rate (AAR) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

To discuss: The problems while using AAR to assess the cash flows, the most troubling feature of AAR and the redeeming qualities of AAR Introduction: The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.

Want to see the full answer?

Chapter 9 Solutions

To discuss: The problems while using AAR to assess the cash flows, the most troubling feature of AAR and the redeeming qualities of AAR

Introduction:

The AAR (Average Accounting Rate of Return) is a method of accounting utilized for comparison purpose with other techniques of capital budgeting.