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Ahlia and Zain have two franchises in different parts of town and want to monitor the performance of the two managers who have full
Ahlia and Zain have two franchises in different parts of town and want to monitor the performance of the two managers who have full control over investments. Forecast results for the year are: Fatima Ahmed $ Profits 80,000 150,000 Investment 500,000 750,000 Fatima is considering investing in a labor-saving piece of equipment which will cost $10,000. This will generate an increase in net profit of $2,500 each year for 10 years, after which time the equipment is expected to have no resale value. Fatima uses straight-line depreciation. Ahmed has been offered a replacement oven for one of his existing ones. The existing one is written down in the books to an NBV of $2,000 and is very inefficient. Total costs are $25,000, including maintenance and depreciation. The replacement will cost $80,000, will have no downtime and negligible maintenance costs in its early years. Depreciation will be 20% p.a. straight-line. Each oven is estimated to generate $70,000 per year before these costs are considered. Styles
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