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

WorldCom Case Study1, When well conceived and executed properly, a growth-t...

When well conceived and executed properly, a growth-through-acquisition strategy is an accepted method to grow a business. What went wrong at WorldCom? Is there a need to put in pl

Explain in detail about the sole proprietorship, Explain in detail about th...

Explain in detail about the Sole proprietorship Sole proprietorship, as the name suggests, is where an individual is the sole owner of a business. This type of business is ofte

Accounts required-bankruptcy and liquidation, ACCOUNTS REQUIRED This ca...

ACCOUNTS REQUIRED This can be summarized depending on the nature of the situation. In a receivership you may be required to prepare a receivers receipt and payments. In the pro

Financial statement analysis, Financial statement analysis involves the app...

Financial statement analysis involves the application of analytical tools and techniques to the financial data to get information that is useful in decision-making. Foundation o

Margin movement, A quick glance at the trend in the Operating and Net Profi...

A quick glance at the trend in the Operating and Net Profit Margin figure indicates an improvement in the margins over the 2 year period. As is evident from the graph above HAIL du

Prepare a cash budget, Question: The accountant of a company is prepari...

Question: The accountant of a company is preparing the cash budget for the first six months of 2011 and obtains the following information: Sales on credit, variable costs an

Annuity, An annuity is explained as stream of uniform duration cash flows. ...

An annuity is explained as stream of uniform duration cash flows. The payment of life insurance premium through the policyholder to the insurance company is an illustration of an a

Limited liability company, Limited Liability Company (LLC) - Form of doing ...

Limited Liability Company (LLC) - Form of doing business combining limited liability for all owners (known as members) with taxation as a PARTNERSHIP. An LLC is formed by filing AR

Adjusting entries clapton guitar company, Adjusting Entries Clapton Guitar ...

Adjusting Entries Clapton Guitar Company entered into the following transactions during 2013. [The transactions were properly recorded in permanent (balance sheet) accounts unless

With the ddm formula calculated growth rate, Using CAPM's formula, Retur...

Using CAPM's formula, Return on equity = Risk-free rate + Beta*(Expected market return - risk-free rate) With the given information, Return on equity = 1% + 1.7*(9% - 1%)

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