As it relates to the accounting rate of return method, average investment is computed as:

Question $18$Answer

a$.$

$($Initial investment $$ Salvage value$)/2.$

b$.$

$($Initial investment $+$ Salvage value$)/2.$

c$.$

$($Annual income $+$ Initial investment$)/2.$

d$.$

$($Initial investment $$ Annual income$)/2.$

e$.$

$($Initial investment $+$ Salvage value $$ Annual income$)/2.$