Accounting rate of interest

The profit per year is 120,000 - 30,000 = 90,000, less depreciation of (300,000 - 20,000) / 5 = 56,000 per year. So the profit is 34,000 per year. The average investment is (300,000 + 20,000) / 2 = 160,000 The ARR is the profit as a % or the average investment. Have you watched my free lectures on this? The lectures are a complete free course and cover everything needed to be able to pass the exam well.