Final answer:
The accounting rate of return for Neil Morrison's investment is calculated by dividing the annual income by the initial investment and converting to a percentage, resulting in an ARR of 18.46%.
Step-by-step explanation:
The accounting rate of return (ARR) is calculated by dividing the average annual profit by the initial investment and then multiplying by 100 to get a percentage. To find the ARR for Neil Morrison's investment, we can take his expected annual income of $24,000 and divide that by his initial investment of $130,000, and then multiply by 100 to express it as a percentage:
ARR = ($24,000 / $130,000) x 100 = 18.46%
Therefore, the correct option is c.18.46%, which represents the accounting rate of return for Neil Morrison's investment in the restaurant.