Purchase Solution

Understanding ROE, ROC and IRR with an example

Not what you're looking for?

Ask Custom Question

When expanding and investing in projects overseas it is essential to understand such things as return on equity (ROE) and internal rate of return. Using internet sources (you may want to start with the websites listed below) gather information on ROE and IRR. Post a two to three paragraph explanation of these terms and the advantages and disadvantages of using them when selecting projects to invest in overseas.

Return on Equity vs. Return on Capital
Return on Equity Definition
Keep Your Eye on the ROE

IRR Example

Select two companies from the same industry. Using the annual report information available on the company's website compute the ROE for each company.

Purchase this Solution

Solution Summary

This solution contain detailed understanding of ROE, ROC and IRR with an example from the Industry to explain the concepts. The solution discuss the advantages and disadvantages of each and how we can interpret the values obtained.

Solution Preview

See attached document for complete help.

Return on Capital
The return on capital on a project measures the returns earned by the firm on it is total investment in the project. Consequently, it is a return to all claimholders in the firm on their collective investment in a project. It gives the relationship between operating income of the firm and capital invested. The capital invested is defined as the sum of the book value of debt and equity. When a substantial portion of the liabilities is either current (such as accounts payable) or non-interest bearing, this approach provides a better measure of the true return earned on capital employed in the business.

While this calculation is rather straightforward for a 1-year project, it becomes more involved for multi-year ...

Purchase this Solution


Free BrainMass Quizzes
Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Introduction to Finance

This quiz test introductory finance topics.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)