A division with capital employed of sh.400, 000 currently earns an ROI of 22%. It can make an additional investment of sh.50, 000 for a five-year life with nil residual value. The average net profit from this investment would be sh.12, 000 after depreciation. The division’s cost of capital is 14%. What are the residual incomes before and after the investment? Select one: A. Sh. 37,000; sh. 32,000 B. Sh. 32,000; sh. 37,000 C. Sh. 47,000, sh. 32,000 D. Sh. 47,000; sh. 37,000
A division with capital employed of sh.400, 000 currently earns an ROI of 22%. It can make an additional investment of sh.50, 000 for a five-year life with nil residual value. The average net profit from this investment would be sh.12, 000 after depreciation. The division’s cost of capital is 14%. What are the residual incomes before and after the investment? Select one: A. Sh. 37,000; sh. 32,000 B. Sh. 32,000; sh. 37,000 C. Sh. 47,000, sh. 32,000 D. Sh. 47,000; sh. 37,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A division with capital employed of sh.400, 000 currently earns an ROI of 22%. It can make an additional investment of sh.50, 000 for a five-year life with nil residual value. The average net profit from this investment would be sh.12, 000 after
What are the residual incomes before and after the investment?
Select one:
A. Sh. 37,000; sh. 32,000
B. Sh. 32,000; sh. 37,000
C. Sh. 47,000, sh. 32,000
D. Sh. 47,000; sh. 37,000
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