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Quick-Silver Concrete Company is planning to release a new concrete product and it is anticipated to generate $6.8 million in estimated revenue. However, the estimated investment of 6.8 million will cost the organization $6 million in estimated expenses in the first year. Quick-Silver Concrete has allocated $5 million in capital for the product in year one and expected to earn $150,000 in income on the capital.

Q-Calculate the return on capital for this new product.

Use the formulas

1. ROC= Revenue-Expense/capital

2. ROC= Revenue-Expense+Income from Capital/Capital charge

3. RAROC= Revenue-Expense-Expected loss+Income from capital/economic capital

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92400148

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