PEV Nov 2009

Terdoo

Task 2.2 b

(v) how do they get return on capital investment 34.09%

Thanks in advance

Rinske

The formula is profit divided by capital times 100.

The profit given for the machines is 460,000.
The capsules are sold for 0.30 each. All costs deducted leaves a profit of 0.01 per capsule. They expect to sell 10,400,000. The profit is then 1,040,000.
Total profit is 460,000 + 1,040,000 is 1,500,000.

The capital investment is 2,400,000 for the machine and 2,000,000 for the capsules.
Total capital is 2,400,000 + 2,000,000 is 4,400,000.

1,500,000 divided by 4,400,000 times 100 is 34.10%

Does this help?

Terdoo

Re Pev Nov 2009

Thanks for the quick reply, I was struggling with that the whole day.