ARR Flashcards by Nana K

Q

What is the formula for Average Annual Return

A

arr/investment x 100

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Q

1st step for calculating AAR

A

Work out total return =

+ve cashflows - cost of investment

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Q

whats step 2

A

calculate average annual return =

total return / # of years

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Q

whats step 3

A

divide AAR/ investment

x 100

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Q

ARR simple calculation

A

total net inflows/ number of years

divided by

investment

x 100

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