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For the capital employed calculation can I know why in the answer they haven’t made
adjustment for the R&D expenditure of 10 and
the depreciation of the operating leases?
shouldn’t the operating lease amount be (115 – 28.8) 86.2?
further why in the answer they state
‘Marketing activities for long-term benefit are correctly added back as they generate future value for the
business and so the prior year expenditure is also added in to capital employed.’
if the prior year expenditure is also added to capital employed shouldn’t the amount be (23.1×2) 46.2?
I think all your queries can be solved if you remember that in EVA, the capital employed is the OPENING capital employed. Anything happening in the year does not affect the opening position.