a rate used to evaluate the acceptability of an investment; equals the after-tax periodic income from a project divided by the average investment in the asset; also called rate of return on average investment (p 1104)
A method of computing the profitability where the total cash inflow over the life of the project is reduced by expenses This amount is divided by the estimated life of the project to arrive at an annual return That's divided by the investment's cost The result is an average rate of return See Discounted Cash Flow
A percentage formed by taking a project's average incremental revenue minus its average incremental expenses (including depreciation and income taxes) and dividing by the project's initial investment