Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 47

A recently hired chief executive officer wants to reduce future production costs to improve the company's earnings, thereby increasing the value of the company's stock. The plan is to invest $40,000 now and $40,000 in each of the next 2 years to improve productivity. By how much must annual costs decrease in years 3 through 7 to recover the investment plus a return of 12% per year