Cadbury plc is a global confectionery company. Cadbury is forecasting its financial statements for Year 9. Selected financial information for Years 7 and 8 is provided in the table. In Year 8 Cadbury is planning to invest £300 million in CAPEX. The average depreciation rate is 10%. What is the forecasted depreciation expense in Year 9? Selected Financial Information
Cadbury Inc. (£ millions)
$$\begin{array} { | c | c | c | }
\hline & \text { Year 7 } & \text { Year 8 } \
\hline \text { PP\&E } & 1,904 & 1,761 \
\hline \text { Depreciation } & & 196 \
\hline \text { CAPEX } & & 53 \
\hline
\end{array}$$

Question

Cadbury plc is a global confectionery company. Cadbury is forecasting its financial statements for Year 9. Selected financial information for Years 7 and 8 is provided in the table. In Year 8 Cadbury is planning to invest £300 million in CAPEX. The average depreciation rate is 10%. What is the forecasted depreciation expense in Year 9? Selected Financial Information
Cadbury Inc. (£ millions)
$$\begin{array} { | c | c | c | } 
\hline & \text { Year 7 } & \text { Year 8 } \
\hline \text { PP\&E } & 1,904 & 1,761 \
\hline \text { Depreciation } & & 196 \
\hline \text { CAPEX } & & 53 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The depreciation expense for Year 9 is calculated by taking 10% of the Year 8 PP&E (£1,761 million) plus 10% of the new CAPEX investment (£300 million), which equals £176.1 million + £30 million = £206.1 million, rounded to £206 million.

Cadbury Plc Is a Global Confectionery Company A)£176 B)£206 C)£286 D)£300 E)£322

Cadbury Plc Is a Global Confectionery Company A)£176
B)£206
C)£286
D)£300
E)£322