Answer:
30.86%
Explanation:
It is a financial ratio used for the capital budgeting. It is the ratio of the average return generated by the capital asset and the its average book value in the given period.
Formula for ARR is as follow
ARR = Average Net Income / Average Investment
Average Net Income = ( $1,558,888 + $2,933,312 + $3,261,712 ) / 3
Average Net Income = $2,584,637
Average Investment = $8,375,000
Placing values in the formula
ARR = $2,584,637 / $8,375,000
ARR = 0.3086 = 30.86%
