Shaft Mining Ltd is a mining contractor with ten autonomous divisions operating in various copper mines in Copperbelt and North$-$Western provinces of Zambia. The cost of capital for the group is $12\%$ per annum and is currently earning $15\%$ on its capital employed.In the ROCE calculation, return is equated with net profit and capital employed figure at the beginning of the financial year. All fixed assets are depreciated on a straight$-$line basis. Investments in new projects include incremental working capital. Projects sold or withdrawn from operation are treated as consisting of fixed assets only.If no new expenditure transactions take place the position of four of the divisions would be:DivisionCapital employed as at $1$ January $2019$Net profitBudgeted for $2019$ SalesK$000$K$000$K$000$Kitwe$3,2008008,000$Solwezi$4,5001,50014,000$Chingola$2,8008407,000$Mufulira$2,0002602,000$The following transactions were proposed:Kitwe Division $$Investment of K$1,000,000$ to yield sales of K$1,500,000$ per annum and net profit of K$200,000$ per annum.Solwezi Division $$Sale for K$750,000$ of a projected that is budgeted to yield a net profit of K$150,000$ in $2019.$ The original equipment cost K$6,000,000$ seven years ago with an expected life of eight years.Chingola Division $($a$)$ sale of product line at book value. The original equipment cost K$600,000$ two years ago$$ with an expected life of three year. This line is budgeted to yield a net of K$200,000$ in $2019$; combined with$($b$)$ replacement$$ of $($a$)$ above by investing K$1,000,000$ in a new product to yield K$300,000$ per annum.Mufulira Division $$Investment of K$800,000$ in a project to yield sales of K$360,000$ per annum and a net profit of K$112,000$ per annum.$($Note$.$ In connection with each of the above transactions, you are to assume that the sale and$/$or investment would be completed by $1$ January $2019$ so as to be included in the relevant ROCE calculations for the year $2019.$ Ignore taxation and inflation considerations and assume that actual results are as budgeted.$)$RequiredA$.$ On the assumption that each transaction goes ahead:$($i$)$ Calculate the new ROCE for each division for the year ending $31$ December $2019.(7$ Marks$)($ii$)$Identify those divisional managers whose bonuses will be higher if they receive annual bonuses directly related to the level of their respective ROCE.$(8$ Marks$)($iii$)$ State, in respect of each division, whether the group$$s interest will be favourably or adversely affected by the proposed transactions. Explain briefly why in each case. $(7$ Marks$)$B$.$ Identify, with brief reasons, which proposals the group would approve if its new capital expenditure were limited to K$2,000,000$ for the four divisions. $(7$ Marks$)$C$.$ Compare the old results Kitwe Division and Mufulira Division, and briefly advise the divisional manager of Mufulira Division how he might improve his performance based on the data concerning Kitwe Division. $(4$ Marks$)$D$.$ Comment briefly on how the new project for Mufulira Division fits in with the advice given in $($c$)$ above. $(4$ Marks$)$E$.$ Calculate the lowest price at which the equipment should be sold by Solwezi Division if the transaction proposed is to break even financially for the group.$$Shaft Mining Ltd is a mining contractor with ten autonomous divisions operating in various copper mines in Copperbelt and North$-$Western provinces of Zambia. The cost of capital for the group is $12\%$ per annum and is currently earning $15\%$ on its capital employed.In the ROCE calculation, return is equated with net profit and capital employed figure at the beginning of the financial year. All fixed assets are depreciated on a straight$-$line basis. Investments in new projects include incremental working capital. Projects sold or withdrawn from operation are treated as consisting of fixed assets only.If no new expenditure transactions take place the position of four of the divisions would be:DivisionCapital employed as at $1$ January $2019$Net profitBudgeted for $2019$ SalesK$000$K$000$K$000$Kitwe$3,2008008,000$Solwezi$4,5001,50014,000$Chingola$2,8008407,000$Mufulira$2,0002602,000$The following transactions were proposed:Kitwe Division $$Investment of K$1,000,000$ to yield sales of K$1,500,000$ per annum and net profit of K$200,000$ per annum.Solwezi Division $$Sale for K$750,000$ of a projected that is budgeted to yield a net profit of K$150,000$ in $2019.$ The original equipment cost K$6,000,000$ seven years ago with an expected life of eight years.Chingola Division $($a$)$ sale of product line at book value. The original equipment cost K$600,000$ two years ago$$ with an expected life of three year. This line is budgeted to yield a net of K$200,000$ in $2019$; combined with$($b$)$ replacement$$ of $($a$)$ above by investing K$1,000,000$ in a new product to yield K$300,000$ per annum.Mufulira Division $$Investment of K$800,000$ in a project to yield sales of K$360,000$ per annum and a net profit of K$112,000$ per annum.$($Note$.$ In connection with each of the above transactions, you are to assume that the sale and$/$or investment would be completed by $1$ January $2019$ so as to be included in the relevant ROCE calculations for the year $2019.$ Ignore taxation and inflation considerations and assume that actual results are as budgeted.$)$RequiredA$.$ On the assumption that each transaction goes ahead:$($i$)$ Calculate the new ROCE for each division for the year ending $31$ December $2019.(7$ Marks$)($ii$)$Identify those divisional managers whose bonuses will be higher if they receive annual bonuses directly related to the level of their respective ROCE.$(8$ Marks$)($iii$)$ State, in respect of each division, whether the group$$s interest will be favourably or adversely affected by the proposed transactions. Explain briefly why in each case. $(7$ Marks$)$B$.$ Identify, with brief reasons, which proposals the group would approve if its new capital expenditure were limited to K$2,000,000$ for the four divisions. $(7$ Marks$)$C$.$ Compare the old results Kitwe Division and Mufulira Division, and briefly advise the divisional manager of Mufulira Division how he might improve his performance based on the data concerning Kitwe Division. $(4$ Marks$)$D$.$ Comment briefly on how the new project for