Answer:
Accounting rate of return, also known as the Average rate of return, or ARR is a financial ratio used in capital budgeting. The ratio does not take into account the concept of time value of money. ARR calculates the return, generated from net income of the proposed capital investment. The ARR is a percentage return. Say, if ARR = 7%, then it means that the project is expected to earn seven cents out of each dollar invested (yearly). If the ARR is equal to or greater than the required rate of return, the project is acceptable. If it is less than the desired rate, it should be rejected. When comparing investments, the higher the ARR, the more attractive the investment. More than half of large firms calculate ARR when appraising projects.
Explanation:
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Answer:
The correct answer is a) investments in new facilities.
Explanation:
Business investment is the main way to obtain benefits in the short, long or medium term. For this, it is necessary to invest a certain capital in business or activities that allow the investor to increase it over time.
In the case of financial investment, capital is used to acquire securities, securities and other financial documents through which to obtain a benefit through the interest earned on them.