Accounting Rate of Return - ARR

What Does Accounting Rate of Return - ARR Mean?
ARR provides a quick estimate of a project's worth over its useful life. ARR is derived by finding profits before taxes and interest.

Investopedia explains Accounting Rate of Return - ARR
ARR is an accounting method used for purposes of comparison. The major drawbacks of ARR are that it uses profit rather than cashflows, and it does not account for the time value of money.

Related Terms

Cash Flow
Future Value
Interest
Present Value
Profit
Time Value of Money
More Related Terms

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