PEV Nov 2009

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Terdoo
Terdoo Registered Posts: 144 Dedicated contributor 🦉
in AAT Level 4 (Level 8 in Scotland)
Task 2.2 b

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

Thanks in advance

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  • Rinske
    Rinske Registered Posts: 2,427 Beyond epic contributor 🧙‍♂️
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    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
    Terdoo Registered Posts: 144 Dedicated contributor 🦉
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    Re Pev Nov 2009

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

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