Johnson Controls spent more than $2.5 millionretrofitting a government complex and installing acomputerized energy-management system for theState of Massachusetts. As a result, the state’s energybill dropped from an average of $6 million a yearto $3.5 million. Moreover, both parties will benefitfrom the 10-year life of the contract. Johnson recovers half the money it saved in reduced utility costs(about $1.2 million a year over 10 years); Massachusetts has more money to spend on other things. Whatis the rate of return realized by Johnson Controls inthis energy-control system?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter1: Introduction And Goals Of The Firm
Section: Chapter Questions
Problem 2.5CE: Energy entrepreneur T. Boone Pickens has proposed converting the trucking fleet in the United States...
icon
Related questions
Question
100%

Johnson Controls spent more than $2.5 million
retrofitting a government complex and installing a
computerized energy-management system for the
State of Massachusetts. As a result, the state’s energy
bill dropped from an average of $6 million a year
to $3.5 million. Moreover, both parties will benefit
from the 10-year life of the contract. Johnson recovers half the money it saved in reduced utility costs
(about $1.2 million a year over 10 years); Massachusetts has more money to spend on other things. What
is the rate of return realized by Johnson Controls in
this energy-control system?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Present Discounted Value
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning