The Advantages & Disadvantages, ARR Method

*Note : I am going to add my Corporate Strategy Assigment when i was at the university about Financial Investment Methods. Enjoy it :)

PART -10

6.3 THE ADVANTAGES & DISADVANTAGES, ARR METHOD

The ARR has some disadvantages which are related with the project profits timing. The capital is reserved until starting the project to get more benefit. Investors have to be awake of the advantages of before the time repayments that will use for other projects.

Some other disadvantages are as below:

• Profits are more important than the cash flows for ARR method. 
• This method prefers the relative measure than the absolute.
• The ARR technique deny the money value timing

In addition, some advantages:

•   Easy and clear method to apply
•  Financial statements help to estimate the profits
•  The ARR method is effective in all life of the project
•  The ARR technique is based on the profit concept; therefore, it is clear to    understand the benefits of the appraisal method for workers.
•  It is easy to match and compare more than one project in this method.