Accounting Rate of Return Calculator

Understand the investment calculation

What the Accounting Rate of Return Calculator is for

Compare average entered accounting profit with average invested book value.

It makes the prices, cash flows, rates, time periods, weights, and model conventions explicit so you can inspect an entered scenario without hidden live-market assumptions.

Calculation structure

Follow the stated model and units

ARR = average annual accounting profit ÷ [(initial investment + salvage value)/2].

Visual explanation

See how the inputs become the result

Capital and cash flowstime and rate→entered modelScenario resultChanging one assumption changes the model—not the marketARR = average annual accounting profit ÷ [(initial investment + salvage value)/2].

Read the estimate correctly

Use the result within its boundaries

Initial investment 1,000, salvage 0, and annual profits 100 and 200 give average profit 150 and ARR 30%.

This uses the average-investment convention and accounting profit, not cash flow or time-value discounting.

Quick guide

How to use this calculator

Enter the cash flows, values, rates, timing, or portfolio assumptions named in the fields.
Use one consistent period and currency convention throughout the scenario.
Read the calculator-specific model limits before interpreting the result.

Calculation method

ARR = average annual accounting profit ÷ [(initial investment + salvage value)/2].

Model, simulation, root, square-root, and compounding outputs are estimates and are visibly marked approximate.

Worked example

Initial investment 1,000, salvage 0, and annual profits 100 and 200 give average profit 150 and ARR 30%.

ARR = average annual accounting profit ÷ [(initial investment + salvage value)/2].

Supported inputs

Precision and limits

Visible input limits

Inputs support up to 12 decimal places and lists support at most 1,200 rows. Iteration and simulation bounds are displayed in their fields.

International scope

No exchange, tax system, reporting standard, currency, fund rule, trading calendar, or market convention is selected automatically.

Decision boundary

Outputs are entered scenarios, not valuations, forecasts, risk limits, executable trades, suitability decisions, or recommendations.

Calculator-specific assumptions

This uses the average-investment convention and accounting profit, not cash flow or time-value discounting.