1. A corporation (Al-Ikhlas Inc.) is about to purchase a new equipment. This will cost $1,000 and will last for five years before losing its value. After depreciation, the machine will create an annual profit of $100 throughout the course of its five-year life. For each of the five years, the return on the capital employed (ROCE) in this machine might be determined as follows:

End of ear	Net book value of machine $	ROCE %
1	1,000 - E200*) 800	12.5 (100 + 800)
2	800 - 200) 600	16.7 (100 + 600)
3	(E600 - 200 400	25.0 (100 + 400)
4	(400 - 200) 200	50.0 100+200
5	(200 - 200) o	Infinite (100 + 0)

Note: : 5) $200 is the annual depreciation charge. Each year, this is the amount by which the net book value is decreased.

Required:

What are your general conclusions on Al-Ikhlas ^ls ROCE?