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

Example on differential cash flows, Q. Example on Differential cash flows? ...

Q. Example on Differential cash flows? Differential cash flows: contracting out versus in-house provision NET PRESENT VALUE =£45519 The positive NPV signifies th

LO9-1, Adger corporation is a service company that measures its output base...

Adger corporation is a service company that measures its output base on the number of customers serviced. The company provided the following fixed and variable cost estimates that

Find the price of a treasury bond , The time t= 0 continuously compounded...

The time t= 0 continuously compounded term structure of interest rates is given by R(0 , T) = 0. 05 - 0. 005 e - 0.10 T . Find the price of a Treasury bond with exactly 3

Default risk premium , A Treasury bond that matures in 10 years has a yield...

A Treasury bond that matures in 10 years has a yield of 3%. A 10-year corporate bond has a yield of 9%. Suppose that the liquidity premium on the corporate bond is 0.8%. What is th

ACCOUNTING DECISIONS, DO ACCOUNTANTS EVER REALLY MAKE IMPORTANT DESIONS?

DO ACCOUNTANTS EVER REALLY MAKE IMPORTANT DESIONS?

Analyse the main sources of finance , Consider a multinational listed compa...

Consider a multinational listed company that has recently carried out an acquisition. You may also select a company that carried out an acquisition long ago as long as there is inf

Elements of the tort of negligence, Answer both parts of this task. Part (i...

Answer both parts of this task. Part (i) is worth a maximum of 5 marks and Part (ii) is worth a maximum of 10 marks. (i) List the elements of the tort of negligence. (ii) Enr

Selling Price of a callable bond, How do I compute the selling price of a c...

How do I compute the selling price of a callable bond? I have the bond selling price if it isn''t callable, but I don''t know how the callable feature impacts the price.

Mutual dealings-bankruptcy and liquidation, MUTUAL DEALINGS A right of ...

MUTUAL DEALINGS A right of set-off is allowed where there have been - (a) Mutual credits, debts or other dealings resulting in pecuniary liabilities, (b) Between the debtor an

Selective inventory control, ABC Analysis: ABC that is Always Better Co...

ABC Analysis: ABC that is Always Better Control analysis is an application of the principle of 'Management by Exception' to the field of inventory control. If we seem at the in

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