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Finance by Lucia Staszkiewicz, Piotr Staszkiewicz

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Chapter 6

Return and Risk Appraisal

Abstract

Return is expressed as a fraction, whilst profit is a value expressed in money terms. Accounting and economic profits are different. Risk has no formal definition; risk is a situation-driven concept.

Keywords

return
risk
uncertainty
RoE
MIRR
Greeks
Project
ARR
image

6.1. Return

The basic goal of a firm is to make a financial return.
Financial return is another term for profit, but accountants and economists have different understandings of what constitutes profit. The return is usually presented as a percentage, whereas profit is given in money terms.
Accounting profit = revenues (sales) less identifiable ...

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