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ARR

This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.

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December 1, 2015 at 5:16 pm #286791
Lilit
Participant
- Topics: 34
- Replies: 62
Hi John,
The question is
We don’t take sunk costs when calculating Accounting rate of return, right???
Thank you 🙂
December 1, 2015 at 5:56 pm #286798
John Moffat
Keymaster
- Topics: 57
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It really depends on the question.
Sunk costs are only usually ignored when getting the cash flows for NPV calculations – then we certainly ignore them.
For ARR we usually take into account all costs, but again it depends on the wording of the question.
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