Calculate the ROCE from the following figures.

Cost of machine £ 160,000 Expected life 5 years Estimated scrap value £ 20,000 Estimated profits before depreciation Year 1 £ 40,000 Year 2 £ 80,000 Year 3 £ 60,000 Year 4 £ 30,000 Year 5 £ 10,000 S olution N ote : Average profit before depreciation £ 220,000 >5 = £44,000 T o tal depreciation = £160,000 - £20,000 = £140,000 A v erage depreciation = £140,000 >5 = £28,000 Average annual profit after depreciation = £44,000 - £28,000 = £16,000 6 ROC E = £16,000 £160,000 * 100, = 10 per cent [Answer: 10 per cent]