Module 5 - Capital Investment Appraisal Flashcards
1
Q
Equation for internal rate of return
A
IRR = A+((B-A) x (Na / Na - Nb))
2
Q
Accounting rate of return
A
ARR = (Average annual profits / Average Capital Investment) x 100
3
Q
Average annual profits
A
AAP = ((annual cash flow generated from the investment - depreciation) / number of years investment)
4
Q
Average capital investment
A
1/2 (investment + residual value)
Or (investment + residual value) / 2