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Dear Sir,
BPP kit Mock2 Q31 (a)(iii),
When calculate the average investment, why cannot we use 2000,000/4years?
I know it’s explained in lecture that the average can be calculate by (2000,000+0)/2. But in this case, as the profit amount we put for ROCE is “annual profit”, why cannot we put “annual average investment”(2000,000/4yrs) for the Capial employed amount?Thanks.
We are not wanting the annual average investment!
If you have 200,000 at the beginning of the period and you have nothing at the end of the period, then on average you had 100,000 throughout the period.
It may help you to watch the Paper MA (was F2) lectures, because this is revision from Paper MA.
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