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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › ARR and ARR
Hello sir.
There are Payback period (no discounting) and Adj payback period (discounted)
I have seen ARR both with discounting and without.
How is examiner gonna ask ARR when he wants discounted Cash flows?
Adjusted ARR?
You cannot possibly have seen ARR with discounting. ARR is a profit measure and discounting only applies to cash flows.
There is no such thing as ‘adjusted ARR’.
so the future cash flows will be before discounting always??
and we use Future values to find Av profit (CASH – TOTAL DEPRECIATION)??
We are always using profits. How we get the profits depends on the information given in the question, but the only difference between net cash flow and profit is depreciation.
Think back to Paper F3 – profits are profits and discounting has nothing to do with it.