The Accounting Rate of Return method evaluates the lifetime return of an investment,whereas Return on Investment evaluates the annual return of an investment.

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The Accounting Rate of Return (ARR) method calculates the return on an investment over its entire life, considering the average annual profit and the initial investment cost. In contrast, Return on Investment (ROI) typically evaluates the efficiency of an investment or compares the efficiency of several investments by measuring the return of an investment relative to its cost on an annual basis.

The Accounting Rate of Return Method Evaluates the Lifetime Return