Accounting rate of return The accounting rate of return (ARR) is a way of comparing the profits you expect to make from an investment to the amount you need to invest. The ARR is normally calculated as the average annual profit you expect over the life of an investment project‚ compared with the average amount of capital invested. For example‚ if a project requires an average investment of £100‚000 and is expected to produce an average annual profit of £15‚000‚ the ARR would be 15 per cent. The
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LTA 1/04 • P. 9– 2 4 EVA LILJEBLOM AND MIKA VAIHEKOSKI* Investment Evaluation Methods and Required Rate of Return in Finnish Publicly Listed Companies ABSTRACT Financial literature advocates the use of the Net Present Value method for the evaluation of investments. Its key parameter is the required rate of return on equity‚ which is to be calculated using the Capital Asset Pricing Model or a similar model especially if the company is publicly listed. However‚ there is ample evidence
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TRANSILVANIA UNIVERSITY FACULTY OF ECONOMIC SCIENCES BUSINESS ADMINISTRATION YEAR II ECONOMETRICS The analysis of the factors which influence the rate of unemployment Sacarea Alexandra Sabrina Table of contents 1.Objectives of project 2.Stages of analysis 2.1.Data collection 2.2.Estimation of parameters 3.Graphical representation 4.Statistical tests 4.1.Fisher Test 4.2.Student Test 5.Durbin-Wtason Test 6
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Accounting Rate of Return (ARR) ARR provides a quick estimate of a project’s worth over its useful life. ARR is derived by finding profits before taxes and interest. ARR is an accounting method used for purposes of comparison. The major drawbacks of ARR are that it uses profit rather than cash flows‚ and it does not account for the time value of money. ARR is most often used internally when selecting projects. It can also be used to measure the performance of projects and subsidiaries within
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Assignment 1 UNIT 1 Question 1 (5 marks): Discuss the rate-limiting factor. Why is it important to consider when studying exercise physiology and training? Provide one example to clarify your understanding. The rate-limiting factor is the “step” that limits performances (the “slow step”). If we know the rate-limiting step in a certain physiological pathway or training situation‚ we can manipulate the factors of this step to change and increase the rate of the pathway. This will improve overall training
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Divisional hurdle rates Financial management and policy Case 1‚ week 2 University of Maastricht Faculty of Economics and Business Administration Maastricht‚ 5th of November 2003 Danner‚ W. I 136964 Kuijt‚ R.J. I 130885 Steenvoorden‚ W.J.M. I 178829 Course Code: 6010v Group number: 7 Subgroup number: 1 Tutor: B. Pavlov Introduction Randolph Corporation is a multidivisional company. Due to frictions among the divisions‚ Randolph’s stock has not performed according to expectations
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LINEAR PROGRAMMING FORMULATION PROBLEMS AND SOLUTIONS 7-14 The Electrocomp Corporation manufactures two electrical products: air conditioners and large fans. The assembly process for each is similar in that both require a certain amount of wiring and drilling. Each air conditioner takes 3 hours of wiring and 2 hours of drilling. Each fan must go through 2 hours of wiring and 1 hour of drilling. During the next production period‚ 240 hours of wiring time are available and up to 140 hours of drilling
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stelian_stancu@yahoo.com Abstract. This paper examines both the benefits of choosing an internationally diversified portfolio and the evolution of the portfolio risk in the context of the current global financial crisis. The portfolio is comprised of three benchmark indexes from Romania‚ UK and USA. Study results show that on the background of a global economic climate eroded strongly by the effects of the current financial crisis‚ international diversification does not reduce risk. Moreover‚ using ARCH
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000‚000 | -$2‚000‚000 | 1 | 500‚000 | | 2 | 500‚000 | | 3 | 500‚000 | | 4 | 500‚000 | | 5 | 500‚000 | | 6 | 500‚000 | | 7 | 500‚000 | 5‚650‚000 | a. Compute the NPV and IRR for the above two projects‚ assuming a 13% required rate of return. b. Discuss the ranking conflict. c. What decision should be made regarding these two projects? Answer: a. NPV of A = $211‚305 NPV of B = $401‚592.64 IRR of A = 16.33% IRR of B = 15.99% b. The later cash flow of
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What are the factors affecting the Return of REITs? REITs unit holders are subject to similar risks as holders of other diversified asset portfolios. Some of the factors which affect returns on REITs are : 1.Demographics Demographics are the data that describes the composition of a population‚ such as age‚ race‚ gender‚ income‚ migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties
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