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ROI PG 131 Num 361

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › ROI PG 131 Num 361

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • May 18, 2021 at 6:37 pm #620968
    Shi2004
    Participant
    • Topics: 79
    • Replies: 33
    • ☆☆

    Hello sir this is an mcq question.
    In the question it says that a new investment will increase annual operating profit by 25000.
    So profit should be 360+25 but in its answer the profit is only 25. Why they did not add the 360?

    May 19, 2021 at 8:02 am #621021
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51585
    • ☆☆☆☆☆

    By all means use the new total profit, in which case you must also use the new total investment. The conclusion will be the same.

    Since the ROI of the new investment is less than the current ROI, the ROI for the whole division will fall.

    Since the RI of the new investment is positive then the RI of the whole division will increase.

    Have you watched my free lectures on this?

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