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?
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?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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
this energy-
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