Radio Frequency Identification (RFID) is a technology used by drivers with “speed passes” at toll booths and ranchers who track livestock from “farm to fork.” Thrift-Mart is implementing the technology to track products within its stores. The RFID-tagged products will result in better inventory control and save the company $1.3 million per month beginning 3 months from now. How much can the company afford to spend now to implement the technology at an interest rate of 12% per year, compounded monthly, if it wants to recover its investment in 2½ years? Also, write a spreadsheet function to display the answer.
What will be an ideal response?
P = 1.3(P/A,1%,28)(P/F,1%,2) (in $ million)
= 1.3(24.3164)(0.9803)
= $30.9886
Spreadsheet function: = PV(1%,2,,PV(1%,28,1.3)) displays $30.9885 (in $ million)
Trades & Technology
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