You are the divisional manager of Elerai Engineering Ltd$.$ Your performance as a divisional manager is evaluated primarily on one measure; after$-$tax divisional segment profits less the cost of capital invested in divisional assets. The $2024$ projections for the existing operations in your division are as follows:

TZS

Sales $20,000,000$

Expenses $(17,500,000)$

Segment profit before tax $2,500,000$

Taxes $(30\%)(750,000)$

Segment profit after$-$tax $1,750,000$

The value of invested capital of the division is TZS $12,500,000,$ the required return on capital is $12\%.$ You are now evaluating an investment in a new product line that would, according to projections, increase $2024$ pre$-$tax segment profits by TZS $200,000.$ The cost of the investment has not yet been determined.

REQURED:

Disregarding the new investment, what is the projected economic value added $($EVA$)$ for your division in $2024?$

Based on your answer in part $($a$),$ what is the maximum amount that you would be willing to invest in the new product line?

Assuming that the new product line would require an investment of TZS $1,000,000$ what would the revised projected EVA for your division be in $2024$ if the investment were made.

Identify and discuss THREE weakness of using return on investment $($ROI$)$ and Residual income $($RI$)$ as performance measures.

Briefly discuss how the balanced scorecard approach improves the selection of performance measures in organizations.