ROCE using closing capital employed Steps:

• 2017 operating profit = 0.28 × $100,000 =$28,000 (closing equity and reserves).
• 2018 operating profit = $28,000 × 1.20 =$33,600.
• Closing equity 2018 = $100,000 +$33,600 = $133,600 (no dividends).
• Closing capital employed 2018 = $133,600 equity +$30,000 debenture = $163,600.
• ROCE 2018 = $33,600 /$163,600 ≈ 20.5% (20%).

Why B is correct:

• ROCE = operating profit / closing capital employed, consistent with 2017 calculation using closing $100,000.

Why the others are wrong:

• A. 19%: Incorrectly uses overstated capital (e.g., including prior retention without adjustment).
• C. 24%: Uses average capital employed ≈ ($130,000 opening +$163,600 closing)/2 = $146,800;$33,600 / $146,800 ≈ 23%.
• D. 25%: Uses opening capital employed = $100,000 +$30,000 = $130,$33,600 / $130,000 ≈ 26%.

Final answer: B