ARR (Accounting Rate of Return) Explained | Investment Appraisal

ARR (Average Rate of Return) IS one of the three main methods of investment appraisal. This video shows you how to calculate it and interpret the results!
#alevelbusiness #businessrevision #aqabusiness #edexcelbusiness #businessalevel
VIDEO CHAPTERS
00:00 Introduction
00:10 Recap: 3 main methods of investment appraisal
00:38 Formula for calculating ARR
01:01 Worked example of ARR

[@tutor2u-official]

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[@y0Ambi]

A mistake was made. It is £312,500 instead if £321,500. Final ARR should be 15.625 %. Just in case you wanted to add a caption to the video to let people know the little error. Great Video though!

[@sebyclement134]

Mistake in calculation, should be £312,500 for anyone wondering

[@myles9313]

Yh I was wondering about that

[@T_Girl]

Me too

[@emmakone4271]

I've been going on and on and thought maybe my calculator had a problem

[@florahgathoni4648]

Funny how the % ARR is the same

[@angelf7897]

Thank you! I thought I was missing something

[@_AsianWomen]

Spend 2 hours reading my lecture note just to then understand it by watching a video. You are so much better at teaching

[@tutor2u-official]

thanks Nadia!!

[@khateebmahmood2011]

I pay over 9 grand a year to a university just to learn pretty much 90% of content through KZbin videos. 😀👍

[@CJdgamer]

Story of my life... They just give us a scheme, what they expect we learn and we youtube the entire thing.

[@JC-ce8uw]

OMG!!! i love your videos i am doing a masters and i still watch these videos when im struggiling :)

[@Giajolie10]

Thanks, I found this a nice and simple explanation of ARR that I could easily follow :)

[@nina31011987]

Yep just little error, but mainly very nice video. Hits the main points of the ARR :) Many thanks!

[@usn8964]

Explained so well, cheers

[@saniabibi933]

this video is very helpful thank you

[@mukamik4998]

Thanks, keep up the good work

[@manikakanda5265]

Outstanding presention

[@scruz6194]

You just saved my IB business exam. Thank you legend!

[@tutor2u-official]

Happy to help!

[@samamiri1449]

great stuff

[@prueXo]

Thanks again Bill

[@kellyemenogu5038]

Just noticed an error calculation. It should be £312,500 as the average, not £321,500. Thanks for the help though, love these videos!

[@tutor2u-official]

My bad

[@dandaaaa9095]

ohhh thank you this made my work easier. :)

[@tutor2u-official]

You're welcome!

[@hafizmuhammadqasim7680]

Great work.

[@tutor2u-official]

Thank you! Cheers!

[@jamiepoole8716]

1,250,000/4 = 312,500 ?

[@rebeccavarley3571]

I noticed this too!

[@lime4297]

Thanks very much

[@tutor2u-official]

You are welcome

[@zameerhaq9142]

ARR formula is avrg annual return / avrg investment , (total investment divided by 2 =avrg investment)

[@jussielongwe7181]

I noticed that too, maybe he should explain

[@amhabil]

Dude 1250000 / 4 is 312,500 not 321500

[@user-ty3pq1bs1q]

So basically the managers or someone should look for a higher percentage not lower? Please answer anyone. I'm lost

[@jonah9286]

higher % = more money back from investment. Think of it as if the arr is 50% for every £1 that you invest you get 50p back.... or something along those lines

[@maariyahpeeroo2036]

How can I calculate the Net Cash flow from a table only showing Cash Inflow?

[@tutor2u-official]

You can't really, unless they give you both the cash inflows and cash outflows. If you only get "cash flow" then it is safe to assume that this information is actually the "net cash flow".

[@maariyahpeeroo2036]

@@tutor2u-official thank you !!

[@JudeBoakyeAsante]

Are you not supposed to use average investment

[@swethas4825]

The average ARR is 312500 not 321500

[@caleba1257]

my dyslexia went crazy reading this comment

[@ghitafusariu5551]

Arr întrebãri atestst

[@ngunitv]

ARR ACOUNTING RATE AXPLAIN/NGUNITV