Chapter 11, Problem 1.1GAP

To determine

Concept introduction:

ARR:

Accounting Rate of Return (ARR) is the rate of return earned on the investment made in a project. ARR is calculated by dividing the Average Accounting profits by Average Investment.

The formula to calculate ARR is as follows:

$ARR=\frac{AverageAccountingprofits}{AverageInvestment}$

To calculate:

The Accounting rate of return