why does average investment equal to (cost of equipment +residual value of equipment)/2?

Australian National University . Accounting rate of return (ARR Example 2 George put forward an investment proposal to his boss. The business uses ARR to assess investment proposals using a minimum 'hurdle' rate of 27%. Details of the proposal were: $200,000 Cost of equipment Estimated residual value of equipment Average annual operating profit before depreciation Estimated life of project Annual straight-line depreciation charge 548,000 10 years 516,000 (i.e.(5200,000-$40,000/10) The ARR of the project will be: 48,000-16,000 (200,000 + 40,000)/2 ARR =- 100% = 26.7%