When calculating the ARR,the average invested capital is determined by adding depreciation back to the book value of the investment.

Question

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The average invested capital in the calculation of the Accounting Rate of Return (ARR) is typically determined by taking the initial investment cost plus the salvage value (if any) at the end of the investment period, divided by 2. It does not involve adding depreciation back to the book value of the investment.

When Calculating the ARR,the Average Invested Capital Is Determined by Adding