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- May 7, 2023 at 11:50 pm #684032
A division has a residual income of $240,000 and a net profit before

imputed interest of $640,000.

If it uses a rate of 10% for computing imputed interest on its

invested capital, what is its return on investment (ROI) to the

nearest whole number?

A 4%

B 10%

C 16%

D 27%hi can you please help me solve this

May 8, 2023 at 9:28 am #684045Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers. It has answers and explanations.

The notional interest must be 640,000 – 240,000 = 400,000.

Since it is calculated using a rate of 10%, the investment must be 400,000/10% = 4,000,000

Therefore the ROI is 640,000/4,000,000 = 16%.

Have you not watched my free lectures on this? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.

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