Aug 20, 2025 · At its core, the Accounting Rate of Return (ARR), also known as the Average Rate of Return, is a capital budgeting metric used to evaluate the profitability of a proposed investment.

What is Accounting Rate of Return? Accounting Rate of Return is the average net income an asset is expected to generate divided by its average capital cost, expressed as an annual percentage.

Aug 26, 2025 · What is the Accounting Rate of Return? The accounting rate of return is the expected rate of return on an investment. One would accept a project if the measure yields a percentage that …

The accounting rate of return, also known as average rate of return, or ARR, is a financial ratio used in capital budgeting. [1] The ratio does not take into account the concept of time value of money.

May 22, 2025 · A clear and simple guide to Accounting Rate of Return (ARR), its formula, applications, pros and cons, and how depreciation impacts investment profitability.

Mar 26, 2016 · The simplest rate of return to calculate is the accounting rate of return (ARR). This is a very fundamental calculation to determine how much value an investment generates for the …

Guide to the Accounting Rate of Return & its definition. Here we learn how to calculate ARR using its formula along with examples & excel template.

The Accounting Rate of Return (ARR) measures the profitability of an investment by dividing the average annual accounting profit by the initial investment cost.

Dec 6, 2023 · In capital budgeting, the accounting rate of return, otherwise known as the “simple rate of return”, is the average net income received on a project as a percentage of the average initial …

Oct 25, 2024 · To calculate the accounting rate of return for an investment, divide its average annual profit by its average annual investment cost. The result is expressed as a percentage.