Average rates of return Flashcards
1
Q
Why do businesses invest in land
A
When needing to expand production for new or existing goods or services
2
Q
Why do businesses invest in machinery and vehicles
A
Machinery used to supply services.
investing can help business become more competitive and profitable
3
Q
What is the average rate of return used for
A
deciding whether an investment is worthwhile.
4
Q
ARR equation =
A
Total net profit/number of years
—————————————— x 100
initial cost
5
Q
What does a high figure for ARR show
A
a greater return on investment
