Average Accounting Rate of Return (ARR) is a metric that analysts can use in capital budgeting. It represents the percentage return in terms of net profit on the capital employed. How to Calculate Accounting Rate of Return ARR is calculated by taking the average net profit derived from a...

The profitability index (PI) is used to assess how much profit may come from a particular investment. Although not that common among finance professionals, as opposed to NPV and IRR, it is still considered economically sound. Governments and NGOs normally use this index when performing capital analysis. Profitability Index Formula...