Chapter 26, Problem 3QC

To determine

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 Choose: The correct value for average amount invested in the asset.