Question 3: Bread Products Ltd 3. Bread Products Ltd is considering the replacement policy for its industrial size ovens which are used as party of a production line that bakes bread. Given its heavy usage, each oven has to be replaced frequently. The choice is between replacing every two or three years. Only one type of oven is used, each of which costs 24,500. Maintenance costs and resale values are as follows: () Resale value () Year 1 2 3 Maintenance per annum 500 800 1,500 15,600 11,200 Original cost, maintenance costs and resale values are expressed in current prices. That is, for example, maintenance for a two year old oven would cost 800 for maintenance undertaken now. It is expected that maintenance costs will increase at 10% per annum and oven replacement cost and resale value at 5% per annum. The money discount rate is 15% Required: (a) Calculate the preferred replacement policy for the ovens, in a choice between a two year or three year replacement cycle. (b) Identify the limitations of Net Present value techniques when applied generally to investment appraisal