Based on following data related to Ambe limited, Jaipur, Answer question.

Determine Return on Investment.

120%

The correct answer is Option 4 - 120%.

Return on Investment = Profit before Interest and Tax/ Capital Employed × 100
                                = 3,00,000/2,50,000 x 100
                                = 120%

Profit after tax = 1,74,000
Tax rate = 40%
Profit before tax = 1,74,000 x 100/60
                        = 2,90,000

Interest on debentures = 1,00,000 x 10/100
                                 = 10,000

Profit before interest and tax = 2,90,000 + 10,000
                                          = 3,00,000

Capital employed = Equity Share Capital + Preference Share Capital + Debentures
                          = 1,00,000 + 50,000 +1,00,000
                          = 2,50,000