Your company is considering which technology for tracking inventory to invest in: RFID or bar codes. The RFID has an initial cost of $330,000 and will last for 5 years, at which point it will have a $25,000 salvage value. The RFID will save $40,000 in the first year, with annual increases of $12,000 thereafter. The bar code system has an initial cost of $175,000 and will last for 5 years, at which point it will have a $15,000 salvage value. The bar code will save $45,0000 annually each year for 5 years. The MARR is 5%. What is the rate of return for the RFID, bar code, and increment? Which alternative should be selected?

Your company is considering which technology for tracking inventory to invest in: RFID or bar codes. The RFID has an initial cost of $330,000 and will last for 5 years, at which point it will have a $25,000 salvage value. The RFID will save $40,000 in the first year, with annual increases of $12,000 thereafter. The bar code system has an initial cost of $175,000 and will last for 5 years, at which point it will have a $15,000 salvage value. The bar code will save $45,0000 annually each year for 5 years. The MARR is 5%. What is the rate of return for the RFID, bar code, and increment? Which alternative should be selected?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EB: Caduceus Company is considering the purchase of a new piece of factory equipment that will cost...

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