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Dear Sir,
Box Co has an operating profit of $20,000 and operating assets of $95000. the cost of capital is 12%. there is a proposed investment of $10000 which will increase the operating profit by $1400.
what is the RI with the proposed investment?
I thought the answer was $8800 but the solution shows depreciation of $850 so the answer is $7950?
I cant find where the depreciation figure came from.
looking forward to hearing from you.
Best regards.
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