BPP question 280

On page 75, 76 BPP practice and revision Kit F5 has the following question:
280 Biscuits and Cakes (6/12 amended) 39 mins

Required
(d) Recalculate Division B’s expected annualised ROI and annualised RI, based on July’s budgeted operating statement after adjusting for the investment. State whether the managing director will be making a decision that is in the best interests of the company as a whole if ROI is used as the basis of the decision.

The answer in the book is as follows:

(d) Division B’s revised annualised net profit and opening net assets after investment
Depreciation = ($2,120,000 – $200,000) / 48 months = $40,000 per month
Net profit for July = $311,000 + ($600,000 × 8.5%) – $40,000 = $322,000
Annualised net profit = $322,000 × 12 = $3,864,000
Opening net assets after investment = $23,200,000 + $2,120,000 = $25,320,000

Division B ROI
ROI = (Net profit / Net assets) × 100%
= $3,864,000 / $25,320,000 × 100% = 15.26%
Division B will not proceed with the investment as it will cause a decrease in ROI.
Division B RI
$’000
Net profit 3,864
Less: imputed interest charge:
$25.32m × 10% (2,532)
Residual income 1,332
Based on the above calculation, it is clear that RI is higher with the investment. This would suggest that the company should proceed with the investment and shows that the use of ROI as a performance measure is likely to result in the manager of Division B making a decision that is not in the best interests of the company as a whole.

In this question, I think there is mistake in the calculation of Net Assets. (affects both RI and ROI figures)

If depreciation expenses for one year is deducted (from Net Profit), then also Accumulated Depreciation of this year should be deducted (from Net Assets).

As it indicates that they calculated it for year end.

Please, explain.