On the basis of the following information, answer the question.

Return on Investment will be:

22.5%

The correct answer is option 2- 22.5%.

Profit before interest and tax = Profit after tax + Tax + Interest on debentures
                                               = 4,50,000 + 1,50,000 + 1,20,000
                                               = 7,20,000

Capital employed = Long term debts + shareholders funds
                            = Equity Share Cap + Preference Share Cap + Reserves & surplus+ debentures
                            = 12,00,000 + 3,00,000 + 5,00,000 + 12,00,000
                            = 32,00,000

Return on Investment = Profit before Interest and Tax/Capital Employed x 100
                                   = 7,20,000/32,00,000 x 100
                                   = 22.5%