Define average rate of return.

3 years ago
Financial Management

The average rate of return, also called the accounting rate of return, is defined as

Average rate of return = Profit after tax/Book value of fixed assets

In the ratio, the numerator is the annual average post tax profit over the life of the investment and the denominator, the average book value of the fixed assets committed to the project.

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Sanisha Maharjan
Sanisha Maharjan
Jan 18, 2022
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