Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 22

A contract between BF Goodrich and the Steel- workers Union of America called for the company to spend $100 million in capital investment to keep the facilities competitive. The contract also required the company to provide buyout packages for 400 workers. If the average buyout package is $100,000 and the company is able to reduce costs by $20 million per year, what rate of return will the company make over a 10-year period Assume all of the company's expenditures occur at time 0 and the savings begin 1 year later.