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For average capital employed for the closing working capital why do we take 0.5+0.2+8? Why 0.5??
And also for depreciation why do we deduct?
For the working capital, the question says that it was $0.5 at the start of the year and that it increases by $0.2. Therefore by the end of the year it will have increased to 0.5 + 0.2.
When calculating the ROI we use the accounting profit, and the accounting profit is always after charging depreciation.