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Qn) It is estimated that half of the marketing spend of $7.638m is building the Cantor
brand long term.’
It is further estimated that there has been the same level of annual spending on longterm
brand building in the years leading up to 2014.Answer). I understand the calculations for the nopat part but in the capital employed
Capital employed calculation:
Opening capital employed 53,400,000
+Marketing spend capitalized 3,819,000But shouldn’t we have multiplied {3,819,000* (no of years cantor has been in business)}, since the question mentions that there was same level of ANNUAL spending in the years leading upto 2014
Yes, I think that is a reasonable approach. However, we don’t know how many years Cantor group has existed for. One subsidiary is 15, the other 2 but the group could have existed earlier with other, now sold, subsidiaries.
I think that the question is badly worded and means that historical cumulative marketing spend is equal to this year’s.
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