[guptashubhangi]

@laughingcoffin said:
ROCE = Avg Profit / Avg Investment

Avg Profit
Total Profit / Number of years – Depreciation

Avg Investment
Investment + Scrap Value / 2

ROCE = 37%

wy are we taking depreciation to calculate avg profit?

[guptashubhangi]

@daisypeg said:
How did you get 37?

I added all profits together and took out scrap value and divided by 4 to get average profit then dividend by average investment and got 83%

me too

[guptashubhangi]

@aagshin said:
Can anybody clearly explain?: Should we choose 10 years or 4 years in NPV question?? and why????

I calculated both nominal and real rates NPV for 10 years.. Nominal NPV was around 84 K(after deduction of 50K investment) and around 74 K in real terms. Dont know correct or not..

I have calculated for 4 years only as it was mentioned in the paper that- “There is an ongoing management poilcy of quoting the projects for 4 years.”

And for the part b of the question, I remember studying in BPP that no matter how we calculate the NPV ( using nominal rate and cash flows or using real rate and real cash flows), the answer of NPV will be almost same.

[guptashubhangi]

I guess payback was 2. since it was for the other project mentioned in below section in which 400k- 40k was the casf flow at the end of the year 4. Even I had wrongly marked 2.4 as answer but could not help it after marking th answer.

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