Discuss the pros and cons of the accounting rate of return as an investment criterion.
Discuss the pros and cons of the accounting rate of return as an investment criterion.
Chapter1: Financial Statements And Business Decisions
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Discuss the pros and cons of the accounting rate of
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Definition:
Average rate of return method: The average rate of return is the amount of income that is earned over the life of the investment. It is used to measure the average income as a percent of the average investment of the business, and it is also known as the accounting rate of return.
The average rate of return is computed as follows:
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