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An investment division currently has net assets of $500000 and is earning profit of $70000 per annum. The divisional manager is considering a new investment which wil cost $20000 and will generate additional profit of $2200 per annum . The cost of capital is 10 %. Calculate RI before without investment and with investment.?
Sir i found this question in ACCA F2 mock exam i cannot understand .. why is RI : $20000-(500000*0.1)=(30000) for without new investment . isnt the profit 70000???Thank you ! 🙂
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