ROI

Brenda and Eddie 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:
Vittorio’s Dugaldo’s
$ $
Profits 90,000 135,000
Investment 500,000 750,000
Vittorio is considering investing in a labour-saving piece of equipment which will cost $8,000. This will generate an increase in net profit of $1,200 each year for 10 years, after which time the equipment is expected to have no resale value. Vittorio uses straight-line depreciation. Dugaldo 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 $75,000, 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 $60,000 p.a. before these costs are considered. The directors demand a minimum return on capital employed 12%.

Q. What is the ROI of the new oven?
a) 1750%
b) 60%
c) 18%
d) 15%

Solution given- ROI = (60,000-15,000)/75000= 60%

Doubt- Why have we subtracted 15,000 from 60,000 in the numerator (profit before interest and tax)?