Use the Information Below to Answer the Following Question(s)

Use the information below to answer the following question(s) .
Boyle Company is evaluating two possible investments in depreciable plant assets. The company uses the straight-line method of depreciation. The following information is available:

-Suppose Barnes & Noble Booksellers is considering investing in warehouse-management software that costs $500,000, has $50,000 residual value and should lead to cash cost savings of $120,000 per year for its five-year life. In calculating the ARR, which of the following figures should be used as the equation's denominator?

A) $225,000
B) $500,000
C) $250,000
D) $275,000