The accountant of your business has recently been taken ill through overwork. In his absence his assistant has prepared some calculations of the profitability of a project, which are to be discussed soon at the board meeting of your business. His workings, which are set out below, include some errors of principle. You can assume that the statement below includes no arithmetical errors.

You ascertain the following additional information:

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Sales revenue Less Costs Materials Labour Overheads Depreciation Working capital Interest on working capital Write-off of development costs Total costs Operating profit/(loss) Total profit (loss) Cost of equipment Year 1 000 180 180 (180) Year 2 000 (28,000) 600,000 450 126 90 45 120 - 27 30 438 12 = Year 3 000 470 132 94 47 120 - 27 30 450 20 Year 4 000 470 132 94 47 120 - 27 30 450 20 Year 5 000 470 132 94 47 120 27 420 50 Return on investment (4.7%) Year 6 000 470 132 94 47 120 - 27 420 50