What are the major shortcomings of using the Accounting Rate of Return (ARR) method as a capital
Question:
What are the major shortcomings of using the Accounting Rate of Return (ARR) method as a capital budgeting method?
Capital BudgetingCapital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 70% (10 reviews)
The biggest shortcoming of using ARR as a capital budgeting ...View the full answer
Answered By
Ali Khawaja
my expertise are as follows: financial accounting : - journal entries - financial statements including balance sheet, profit & loss account, cash flow statement & statement of changes in equity -consolidated statement of financial position. -ratio analysis -depreciation methods -accounting concepts -understanding and application of all international financial reporting standards (ifrs) -international accounting standards (ias) -etc business analysis : -business strategy -strategic choices -business processes -e-business -e-marketing -project management -finance -hrm financial management : -project appraisal -capital budgeting -net present value (npv) -internal rate of return (irr) -net present value(npv) -payback period -strategic position -strategic choices -information technology -project management -finance -human resource management auditing: -internal audit -external audit -substantive procedures -analytic procedures -designing and assessment of internal controls -developing the flow charts & data flow diagrams -audit reports -engagement letter -materiality economics: -micro -macro -game theory -econometric -mathematical application in economics -empirical macroeconomics -international trade -international political economy -monetary theory and policy -public economics ,business law, and all regarding commerce
4.00+
1+ Reviews
10+ Question Solved
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1119371403
4th edition
Authors: Robert Parrino, David S. Kidwell, Thomas Bates
Question Posted:
Students also viewed these Business questions
-
What are the major shortcomings of using the ARR method as a capital budgeting method?
-
What is the internal rate of return (IRR) method?
-
West Street Automotive is considering adding state safety inspections to their service offerings. The equipment necessary to perform these inspections will cost $557,000 and will generate cash flows...
-
The PredatoryCreditCard class provides a processMonth( ) method that models the completion of a monthly cycle. Modify the class so that once a customer has made ten calls to charge during a month,...
-
(a) What are current liabilities? (b) Give four examples of current liabilities a company might have.
-
In Exercises solve the first-order linear differential equation. 4y' = e x/4 + y
-
(a) How many seconds does it take a pebble released from rest off a bridge to fall \(9.8 \mathrm{~m}\) ? (b) What is the pebble's speed when it has fallen \(9.8 \mathrm{~m}\) ?
-
The real rate of interest is currently 3%; the inflation expectation and risk premiums for a number of securities follow. a. Find the risk-free rate of interest, RF, that is applicable to each...
-
If you invest $3,000 in an investment account paying 3% interest compounded quarterly, how much will the account be worth in 10 years?
-
On January 2, 2021, Sanborn Tobacco Inc. bought 5% of Jackson Industrys capital stock for $90 million. Jackson Industrys net income for the year ended December 31, 2021, was $120 million. The fair...
-
What is the average accounting rate of return (ARR) on a piece of equipment that will cost $1.2 million and that will result in pretax cost savings of $380,000 for the first three years and then...
-
Under what circumstances do the NPV and IRR decision rules always yield the same decision?
-
Required Identify which of the following items are added to or subtracted from the unadjusted book balance to arrive at the true cash balance. Distinguish the additions from the subtractions by...
-
A child has legs that are each 0.500 m long. What is her maximum walking speed? 2.19 m/s O 5.58 m/s O 2.6 m/s 2.21 m/s
-
Read the section in Chapter 12: Challenges to Our Understanding of Leadership that begins on page 418. Research and explore some of the new theories of leadership using some of the articles below (or...
-
consider what you would do at your company as the newly hired HR manager-- One department manager is worried about an employee's outbursts and high level of anger while at work Another department...
-
Discuss the need for both parents in understanding pregnancy and being involved. What is your view on childbirth classes and birth plans? Please include an example for your reasons. Research infant...
-
Using the following words to write a legible paragraph which ensure me that the student understands Human Resources Training and Development. Use all the words to in the paragraph. Readiness for...
-
Maximize 10x + 20y + 50 subject to the constraints Solve the linear programming problem by the simplex method. + < 10 5x + 2y s 20 2 0, 20.
-
Orange juice producers are dismayed and puzzled. An economist told them that the reason the demand for orange juice fell is that a new technology allow tomato producers to pick ripe tomatoes more...
-
Present Value If you were an athlete negotiating a contract, would you want a big signing bonus payable immedia.ely and smaller payments in the future, or vice versa? How about looking at it from the...
-
Present Value Suppose two athletes sign 10-year contracts for $80 million. In one case, were told that the $80 million will be paid in 10 equal installments. In the other case, were told that the $80...
-
Present Value Suppose two athletes sign 10-year contracts for $80 million. In one case, were told that the $80 million will be paid in 10 equal installments. In the other case, were told that the $80...
-
Perpetual inventory using LIFO Beginning inventory, purchases, and sales for Item 88-HX are as follows: July 1 Inventory 106 units @ $28 July 8 Sale 85 units July 15 Purchase 118 units @ $32 July 27...
-
Materials Costing for a Furniture Company Pull Up a Chair Company manufactures furniture. The company uses a job order cost system. Balances on August 1 from the materials ledger are as follows:...
-
You are a defense attorney, and your first big case is a multiple murder. You have come to the realization that your client really did break into a couple's home and torture and kill them in the...
Study smarter with the SolutionInn App