The accounting rate of return is calculated as:

Question

Quizplus · Accepted Answer

The accounting rate of return is calculated as annual net income divided by initial investment. This ratio measures the profitability of a project or investment and helps in decision-making. Option A is incorrect because it divides the initial investment by annual net income, while the correct calculation is the opposite. Option B is incorrect because it divides the initial investment by the required rate of return, which is not used to calculate the accounting rate of return. Option D is incorrect because it divides the annual net income by the required rate of return, which is also not a part of the calculation for the accounting rate of return.

The Accounting Rate of Return Is Calculated As