- This topic has 1 reply, 2 voices, and was last updated 2 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
- Topics: 53
- Replies: 46
- ☆☆
At the beginning of 20X2, a division has capital employed, consisting of non-current assets of $2 million (at carrying value) and working capital of $0.2 million. These are expected to earn a profit in 20X2 of $0.5 million, after depreciation of $0.4 million. A new machine will be installed at the beginning of 20X2. It will cost $0.8 million and will require an additional $0.1 million in working capital. It will add $0.35 million to divisional profits before deducting depreciation. This machine will have a four-year life and no residual value: depreciation is by the straight-line method. When calculating ROI, capital employed is taken at its mid-year value.
What is the expected ROI of the division in 20X2?
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.