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Hi,
I have a question for the calculation of RI.
For example, if the Working capital of company is 10. The non-current asset is 100 and accumulated depreciation is 40. The company has cost of capital at 15%.
Then when we calculate the notional interest, what figure and number we would use?
Thank youIt is calculated on the long-term capital, which is equal to the NCA’s + the working capital of the company which on your figures is 100 – 40 + 10 = 70.
Thank you so much for the answer. I have been confused about the value of capital employed that I should use. Now everything is clear. 🙂
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