This question appeared in the June 2015 exam.?
At the start of the year, a division has non-current assets of $4 million and makes no additions or?disposals during the year. Depreciation is charged at a rate of 10% per annum on all non-current?assets held at the end of the year. Working capital is $0.5 million at the start of the year although?this is expected to increase by 20% by the end of the year. The budgeted profit of the division after?depreciation is $1.2 million.?
What is the expected ROI of the division for the year, based on average capital employed??