If Charles retired two years early the company would have to pay an extra20,000 lump sum into the pension scheme

The building housing the IT department was on a three-year lease and the company was committed to an annual rental of10,000 per year for that period. This building could be sublet if IT were outsourced generating 4,000 in the first year, 8,000 in the second, and 10,000 in the final year of the lease.

Current forecasts of consumables in the IT department are 5000, 6000 and 7000 over the next three years

The resale value of the IT equipment bought last year is 30,000.

Annual overheads for the IT department are 27,000 per year. 60% of the overhead varies with staff numbers. The remaining 40% is a share of central

overhead charges. further Currently, the IT department has ten staff earning, on average, 30,000 per year. ITCO had agreed to take on eight of these staff maintaining the terms and conditions they held with GB. Of the remaining two staff one, Charles, was eager to take early retirement and the other was to be retained within GB, at a salary of 30,000 to assist with management of the contract. A contract manager would have to be appointed by GB-this would be a new appointment, the company did not currently have anyone with those skills in-house-at an estimate salary of 50,000.