ROI

Hello John, Regarding this question and the working below:

At the start of the year, a division has non-current assets of $4 million and makes no additions or disposals during
the year. Depreciation is charged at a rate of 10% per annum on all non-current assets held at the end of the year.
Working capital is $0·5 million at the start of the year although this is expected to increase by 20% by the end of the
year. The budgeted profit of the division after depreciation is $1·2m.
What is the expected ROI of the division for the year, based on average capital employed?

Working
Opening capital employed: $4m + $0·5m = $4·5m
Closing capital employed: ($4m x 0·9) + ($0·5 x 1·2) = $3·6m + $0·6 = $4·2m
Average capital employed = $4·35m
Profit after depreciation = $1·2m
Therefore ROI = $1·2m/$4·35m = 27·59%

I do not understand the calculation of the Closing capital employed. That “$0.6” added is the average of the budgeted profit?

Thank you in advance.