A project involves the immediate purchase of an item of plant costing $150,000. It would generate annual cash flows of $38,400 for four years, starting in Year 1. The plant purchased would have a scrap value of $20,000 in five years, when the project terminates. 

Determine the project ROCE using:

(a) initial capital costs &

(b) average capital investment.

Answer rating: 100% (QA)

Project ROCE using initial capital costs The ROCE using initial capital costs is calculated as follo... View the full answer