Question $2$ Worth $10$ marks

FinPlan Limited is a company that specialises in developing and marketing software to use in financial planning. It has just reported a net income of $$1\mathrm{.}5$ million and total capital of $$5\mathrm{.}5$ million. Four years ago, the company started to recruit consultants that were experts on financial planning regulations. This year the recruitment costs were $$70,000,$ in $2022$ they were $$150,000$; in $2021$ they were $$200,000$; and in $2020$ they were $$175,000.$ These consultants have been essential in ensuring the software can be used by financial planners and they typically work for FinPlan Limited for two years. FinPlan Limited has maintained a fixed debt ratio of $45\%.$

Explain how you can compare the profitability of FinPlan Limited over the past four years with other companies in the Information Technology $($IT$)$ industry. $($Worth $4$ marks$)$

Calculate the impact of FinPlan Limited$$s recruitment costs on FinPlan Limited$$s return on equity. You must write each step of your calculations. $($Worth $2$ marks$)$

Describe the impact of FinPlan Limited$$s recruitment costs on FinPlan Limited$$s return on equity. $($Worth $2$ marks$)$

Explain how you can use information on other companies in the IT industry to estimate the value of shares in FinPlan Limited. $($Worth $2$ marks$)$