Revision 2 – Investment Appraisal

1.2.1 Also known as ROCE or ROI. 1.2.2 Decision rule: ARR > target return or hurdle rate, accept the project. Take the project with the highest ARR. 1.2.3 Calculation of ARR – three version. Annual basis – ARR = Profit for the year × 100% Asset book value at start of year Then, take average of each year’s ARR to find the average ARR. ................
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