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Q;a company has a nca of$460000 which will depriciated to nil on a straight line basis over 10 years.net current assets will be $ 75000.and annual profit will consistently be $30000.roi is measured as return on net asset
Required to calculate roi in the years 2 and 6
Please help to solve the questionYou really should not be attempting questions for which you do not have an answer – that is not the way to learn 🙂
After 2 years, the NCA’s will be 460,000 – (2 x 46,000) = 368,000.
Therefore total assets = 368,000 + 75,000 = 443,000Therefore the ROI = 30,000 / 443,000 = 6.77%
After 3 years, the NCA’s will be 460,000 – (3 x 46,000) = 322,000
Therefore total assets = 322,000 + 75,000 = 397,000
Therefore the ROI = 30,000 / 397,000 = 7.56%You should now be able to calculate the other years yourself.
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