Answer:
Average investment(denominator) = $113,000
Explanation:
Annual rate of return is the average annual income as a percentage of average investment . It is the proportion of the average investment that is earned, on the average, as annual income.
Annual rate of return = annual net income/ average investment
Average investment =( Initial,cost + scrap value)/2
Average investment = (220,000 + 6,000)/2= $113,000
Average investment(denominator) = $113,000
