Santos Golf Products is considering whether to upgrade its equipment Managers are considering two options. Equipment manufactured by Vargas Inc. costs $800,000 and will last six years and have no residual value. The Vargas equipment will generate annual operating income of $156,000. Equipment manufactured by Riverbank Limited costs $1,125,000 and will remain useful for seven years. It promises annual operating income of $236,250, and its expected residual value is $100,000. Which equipment offers the higher ARR? First, enter the formula, then calculate the ARR (Accounting Rate of Return) for both pieces of equipment. (Enter the answer as a percent rounded to the nearest tenth percent.) Accounting Average annual operating income from asset Initial investment rate of return Vargas 22666.67 800.000 2.83