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Average Rate of Return / Return on Investment ( ARR/ROI)

Average Rate of Return / Return on Investment ( ARR/ROI)

Technology
Average Rate of Return / Return on Investment ( ARR/ROI) Ex- 15. Nuha Ltd. is considering the purchase of a new machine which costs Tk 1,00,000. It is estimated that the machine have a life of 5 years at the end of which it will have a salvage value of Tk 5,000. The company is in the 50% tax bracket. The estimated annual cash flows are as follows : Year CFBT (Tk) 1 25,000 2 25,000 3 23,000 4 24,000 5 22,000 Required : (1) PBP. (2) ARR.  (3) ROI.                 [ Ans : (1) 4.66 years.  (2) 4.57%.  (3) 2.40% ] Average Rate of Return / Return on Investment ( ARR/ROI) Ex-16. A machine costing  Tk 55,000 will have 5 useful years having a salvage value of Tk 5,000. Cash flows before depreciation and tax per year of the machine are as follows :...