Brummy PLC consists of several investment centres. Green Division has a controllable investment of 750,000 and profits
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Brummy PLC consists of several investment centres. Green Division has a controllable investment of £750,000 and profits are expected to be £150,000 this year. An investment opportunity is offered to Green that will yield a profit of £15,000 from an additional investment of £100,000. Brummy accepts projects if the ROI exceeds the cost of capital, which is 12%.
• Calculate Green’s ROI currently, for the additional investment and after the investment.
• How will Green and Brummy view this investment opportunity?
• Calculate the effect of the new investment opportunity on Green’s residual income.
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Kirti Kaushal
Having experience of more than 10 years is good enough to coach my students. Currently, I am working as an active supervisor of ACCA students. In my career, I helped students in financial accounting, management accounting, cost accounting, financial reporting, taxation, and audit. I also helped students publish their articles or papers in good journals. I also helped students with thesis and objective writing.
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ISBN: 9780470016091
2nd Edition
Authors: Paul M. Collier
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