Hi, please help with the red marked part. Please provide the detailed solution of how you get this answer. Thank you!

Required information Use the following information for the Quick Study below The following information applies to the questions displayed below] Project A requires a $305,000 initial investment for new machinery with a five-year life and a salvage value of $41,500 The company uses straight-line depreciation. Project A is expected to yield annual net income of $21,200 per year for the next five years QS 25-6 Accounting rate of return LO P2 Compute Project A's accounting rate of return. Answer is complete but not entirely correct Accounting Rate of Return Accounting Rate of Retur Choose Numerator: Choose Denominator Annual after-tax netestment Annual average investment Accounting rate of returm income 21,200 05,000 6.95 %