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Upon moving in to a new office (in an older building,) Engineer E installs overhead fluorescent lighting, at a cost of $10,000, removing and discarding the existing cut glass incandescent fixtures. During the term of the lease, Landlord L visits the office and observes the lights. At the expiration of the three year lease, E leaves the new lights, demanding $4,000 to cover the non-amortized cost of this five year property. The landlord replies by demanding all remedies provided at law. The cost to replace the original fixtures is stipulated at trial by both parties to be $10,000 including $7,000 for materials and $3,000 for labor including removal of the new fluorescent fixtures. If the new fluorescent lights are removed, the fixtures have a salvage value of $5,000. A real estate expert testifies that the office with the new fixtures should rent $200 per month more than with the old fixtures.

Who wins, how much, and why?

Operation Management, Management Studies

  • Category:- Operation Management
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