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Capital Memo For this discussion you will assume the role of the Cost Accountant and will...

Capital Memo For this discussion you will assume the role of the Cost Accountant and will be responding to the CFO. Xxxx, The company is looking to invest $800,000 for two addition lines for production. Our current ROI targets are at 15%. These two lines would then produce annual profits of $65,000 for each line. Do you think the company should move forward with this purchase? Mrs. Evans CFO

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Answer #1
Dear Student
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Please find below the answer
Statement showing Computations
Particulars Amount
Amount of investment       800,000.00
Annual profit each line          65,000.00
Annual profit for 2 lines       130,000.00
Return on investment = 130000/800,000 16.25%
current ROI targets 15%
Yes company should proceed with investment asit will provide return of 16.25% which is greater than 15%
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