Evaluating the investment using return on capital employed, Financial Accounting

Assignment Help:

Evaluating the investment using return on capital employed:

Annual depreciation charge = 1500000/5 = $300000

2087_Evaluating the investment using return on capital employed.png

Average investment = 1500000/2 = $750000

Average annual accounting profit = 1359529/5 = $271906

Return on capital employed = 100 × (271906/ 750000) = 36%

Ever since the return on capital employed is greater than the hurdle rate of 20% the investment is financially acceptable.


Related Discussions:- Evaluating the investment using return on capital employed

How much of the existing cash balance, As of January 1, 2011, the partnersh...

As of January 1, 2011, the partnership of Canton, Yulls, and Garr had the following account balances and percentages for the sharing of profits and losses: Cash 80,000 non cash

Home work, 1. The acceptance of a capital budgeting project is usually eval...

1. The acceptance of a capital budgeting project is usually evaluated on its own merits. That is, capital budgeting decisions are treated separately from capital structure decision

Profits in subsidiary company-group accounts, Profits in subsidiary company...

Profits in subsidiary company The remaining profits that belong to the holding company should be split between pre-acquisition profits and post acquisition profits. The pre

Auditing., assess the risk of material misstatement at assertion level

assess the risk of material misstatement at assertion level

What is the price of an asset paying, Suppose the interest rate for a one-p...

Suppose the interest rate for a one-period bond is 4% between the current period and the next. Then the rate becomes 5% for ever. (a) What is the price of an asset paying (1,1,1

How to prepare annual financial statements, "Government departments should ...

"Government departments should take audit report seriously by preparing annual financial statement on time".... Based on the above statement, suggest ways on how government depa

Define current liability, The following items represent liabilities on a fi...

The following items represent liabilities on a firm's balance sheet: a. An amount of money owed to a supplier based on the terms 2/20, n/40, for which no note was executed. b. An a

The federal government, The Federal Government The Federal Government...

The Federal Government The Federal Government is the single largest influence on the U.S. economy. There are two main areas in which the government can impact the economy: fi

Determine income statement , Mr. Wong currently running a small manufactur...

Mr. Wong currently running a small manufacturing business.  The Trial Balance of the business at 31 March 2011 is as follows:

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd