Imbed merchandise with small radio frequency identification

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Reference no: EM131014075

Saks Fifth Avenue, a large retailer is going to run an experiment at one of its stores to see how cost effective it will be to imbed merchandise with small radio frequency identification (RFID) chips. Shoppers will select items from the store and walk out without stopping to pay at a checkout lane. The RFID chips will record what items are taken and will automatically deduct their price from shoppers’ bank accounts. The retailer expects to save the cost of staffing 25 checkout lanes, which amounts to $500,000 per year. How much can Saks Fifth Avenue afford to spend on its RFID investment if the system has a life of 20 years and no residual value? The retailer’s interest rate is 13% per year.

Reference no: EM131014075

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