Original sentence: Accounting rate of returnor ARR is a financial ratio used in capital budgeting
Edited sentence: ARR = (Average net income)/(Average investment).ARR calculates the return, generated from net income of the proposed capital investment.Accounting Rate of Return (ARR).Accounting rate of return or ARR is a financial ratio used in capital budgeting.where ''Average investment =  (Book value at beginning of year 1 + book value at end of useful life) /2'