finance question

This query is : Resolved

riken (Querist)
Follow

01 December 2007 there is any conflict between average rate of return(ARR) and net present value (NPV)plz reply fast reply with any example

KAAPIL

KAAPIL (Expert)
Follow

01 December 2007 The conflict is between IRR and NPV.

riken

riken (Querist)
Follow

03 December 2007 asafaf

Upgrade to CAclubindia Pro. Subscribe Now!

KAAPIL

KAAPIL (Expert)
Follow

03 December 2007 What's this?

riken

riken (Querist)
Follow

06 December 2007 there is any conflict between average rate of return(ARR) and net present value (NPV)plz reply fast reply with any example

KAAPIL

KAAPIL (Expert)
Follow

06 December 2007 NPV is PV of Inflows - PV of Outflows

ARR is dealing with average profit after tax and is divided by average investment.

In case scrap value is zero then take zero as same and then take average. Thus it works on the average principle.

NPV works on the principle of present value.

The conflict is on terms of average and present value principle.

KAAPIL

KAAPIL (Expert)
Follow

06 December 2007 Major conflict is between NPV and IRR and not NPV and ARR.

NPV - ARR is only in principle conflict.

Online classes for CA CS CMA