Question: Hi there! I am just having some issues grasping the concept of Return on Investment in Managerial Accounting and was wondering if anyone could help.

Hi there! I am just having some issues grasping the concept of Return on Investment in Managerial Accounting and was wondering if anyone could help. My professor suggested a scenario that I should practice with, but I am still having troubles understanding it completely. Here is the scenario:

A company has a division with capital employed of $10 million that currently earns an ROI of 15% per year. It can make an additional investment of $2 million for a 5 year life, with no scrap value. The average net profit from this investment would be $280,000 per annum after depreciation. The division's cost of capital is 9%

What I need help to understand, is how to calculate the ROI and RI for

a) The Original Investment

b) The Additional Investment

c) The Total new level of investment

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