When determining the rate of return on assets quizlet

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is the return expected on an asset during a future period. Expected return on an investment =. [(Prob. of event 1 occurring) x (Value of event 1)] + [(Prob. of event 2 occurring) x (Value of event 2)] example: Equal probability of a rate of return of 15% and 5%. Consider the following information and then calculate the required rate of return for the Global Investment Fund, which holds 4 stocks. The market's required rate of return is 13.25%, the risk- free rate is 7.0%, and the Fund's assets are as follows: Internal rate of return (IRR) is the rate of return, based on discounted cash flows, of a capital investment that makes the NPV of the capital investment zero. True When using IRR as an analytical method, if everything else is considered equal, management should invest in a capital asset if the IRR of the asset exceeds the Ziker Golf Company is evaluating a capital budgeting project that has a higher risk than the average risk of its existing assets. When evaluating projects that are riskier than average, Ziker normally adjusts its required rate of return by 4 percent. Ziker requires a 12 percent return on average-risk projects. (Current Assets - Inventory) / (Current Liabilities) Accounts Receivable Turnover Definition The number of times the accounts receivable are turned over or are collected during the period Either formula can be used to calculate the return on total assets. When using the first formula, average total assets are usually used because asset totals can vary throughout the year. Simply add the beginning and ending assets together on the balance sheet and divide by two to calculate the average assets for the year. A Rate of Return (ROR) is the gain or loss of an investment over a certain period of time. In other words, the rate of return is the gain (or loss) compared to the cost of an initial investment, typically expressed in the form of a percentage. When the ROR is positive, it is considered a gain and when the ROR is negative,

The combination of your cash flow and the equity you build is known as your total return, or internal rate of return (IRR). For example, if you pay $40,000 to acquire a property, and it generates

Ziker Golf Company is evaluating a capital budgeting project that has a higher risk than the average risk of its existing assets. When evaluating projects that are riskier than average, Ziker normally adjusts its required rate of return by 4 percent. Ziker requires a 12 percent return on average-risk projects. (Current Assets - Inventory) / (Current Liabilities) Accounts Receivable Turnover Definition The number of times the accounts receivable are turned over or are collected during the period Either formula can be used to calculate the return on total assets. When using the first formula, average total assets are usually used because asset totals can vary throughout the year. Simply add the beginning and ending assets together on the balance sheet and divide by two to calculate the average assets for the year. A Rate of Return (ROR) is the gain or loss of an investment over a certain period of time. In other words, the rate of return is the gain (or loss) compared to the cost of an initial investment, typically expressed in the form of a percentage. When the ROR is positive, it is considered a gain and when the ROR is negative, Return On Assets Definition. The Return On Assets Calculator can calculate the return on assets ratio of any company if you enter in the net income and the total assets of the company. The return on assets (ROA) ratio is a handy way to measure the profitability of a business based on a relation to their total amount of assets. The combination of your cash flow and the equity you build is known as your total return, or internal rate of return (IRR). For example, if you pay $40,000 to acquire a property, and it generates Return on assets is a profitability ratio that provides how much profit a company is able to generate from its assets. In other words, return on assets (ROA) measures how efficient a company's management is in generating earnings from their economic resources or assets on their balance sheet.

Step 4; Computation of accounting rate of return: Accounting rate of return = Annual net cost saving / average investment = $15,000 / $90,000 = 16.67%. Note: In this exercise, we have used average investment as the denominator of the formula. But sometime analysts use original cost of the asset as the denominator. See exercise 9, 12 and 13.

• Rate of return: the percentage change in value that an asset offers during a time period. ♦The annual total return for $100 savings account with an annual interest rate of 2% is $100 x 1.02 = $102, so that the rate of return = ($102 - $100)/$100 = 2% per year. • Real rate of return: inflation-adjusted rate of return. Understand the expected rate of return formula. Like many formulas, the expected rate of return formula requires a few "givens" in order to solve for the answer. The "givens" in this formula are the probabilities of different outcomes and what those outcomes will return. The formula is the following.

The combination of your cash flow and the equity you build is known as your total return, or internal rate of return (IRR). For example, if you pay $40,000 to acquire a property, and it generates

Either formula can be used to calculate the return on total assets. When using the first formula, average total assets are usually used because asset totals can vary throughout the year. Simply add the beginning and ending assets together on the balance sheet and divide by two to calculate the average assets for the year. A Rate of Return (ROR) is the gain or loss of an investment over a certain period of time. In other words, the rate of return is the gain (or loss) compared to the cost of an initial investment, typically expressed in the form of a percentage. When the ROR is positive, it is considered a gain and when the ROR is negative,

Either formula can be used to calculate the return on total assets. When using the first formula, average total assets are usually used because asset totals can vary throughout the year. Simply add the beginning and ending assets together on the balance sheet and divide by two to calculate the average assets for the year.

Understand the expected rate of return formula. Like many formulas, the expected rate of return formula requires a few "givens" in order to solve for the answer. The "givens" in this formula are the probabilities of different outcomes and what those outcomes will return. The formula is the following. Return on equity (ROE) is a ratio that provides investors with insight into how efficiently a company (or more specifically, its management team) is handling the money that shareholders have contributed to it. In other words, it measures the profitability of a corporation in relation to stockholders’ equity.

Internal rate of return (IRR) is the rate of return, based on discounted cash flows, of a capital investment that makes the NPV of the capital investment zero. True When using IRR as an analytical method, if everything else is considered equal, management should invest in a capital asset if the IRR of the asset exceeds the Ziker Golf Company is evaluating a capital budgeting project that has a higher risk than the average risk of its existing assets. When evaluating projects that are riskier than average, Ziker normally adjusts its required rate of return by 4 percent. Ziker requires a 12 percent return on average-risk projects. (Current Assets - Inventory) / (Current Liabilities) Accounts Receivable Turnover Definition The number of times the accounts receivable are turned over or are collected during the period