FNPF in a couple of days and very confused

Roro1303

hello all,

I have my exam in a couple days, just completed the 1st CBA and got very confused on the below task after i checked the answers:

Task 2.2 - on the calculation of the additional ROI: 63.33% is what the model answer is giving.

this is what i get : Additional Revenue: 1 200 000
additional Annual Profit 1 900 000

so: profit/Investment x 100% = 158.33%

I don't want to beleive that the model answer is wrong, unless i am not thinking straight.

thanks for your help

coojee

I'm confused, you've given us figures for additional profit and addtional revenue, don't we need the figure for the amount of the investment? And how can additional profit be more than the additional revenue?

Roro1303

hello Coojee,

You may need to check Task 2.2, on the CBA 1: the additional profit is more than the additional revenue as savings have been made on Variable & fixed cost which are being add on to the revenue figure and therefore increases the the profit.

Actually, you know what? i have found the answer, thanks for helping, i probably did not look at the additional Information given, it's says additional Investment of £3m.

Thanks for your help
cheers