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3. (15 points) A store owner is considering installing a security system to reduce shoplifting losses. Without the system, the owner figures 100 shoplifters each
3. (15 points) A store owner is considering installing a security system to reduce shoplifting losses. Without the system, the owner figures 100 shoplifters each year are not caught and that next year each shoplifter will steal, on the average, $6.45 of merchandise. This average will increase at the rate of 35cents each year thereafter because the owner plans to increase his prices at that rate to keep up with inflatiorn With the system, the owner estimates half the shoplifters will not attempt it. The other half will be caught in the attempt, and because of the apparent increase in the risk of being caught, they will try to steal higher priced goods. The owner estimates during the first year of operations, each shoplifter will be caught with on the average $10.96 of merchandise. This average will also increase at 35 cents a per year. The system costs $1,195.60 installed and has a life of five years. What is the rate of return on this investment? 3. (15 points) A store owner is considering installing a security system to reduce shoplifting losses. Without the system, the owner figures 100 shoplifters each year are not caught and that next year each shoplifter will steal, on the average, $6.45 of merchandise. This average will increase at the rate of 35cents each year thereafter because the owner plans to increase his prices at that rate to keep up with inflatiorn With the system, the owner estimates half the shoplifters will not attempt it. The other half will be caught in the attempt, and because of the apparent increase in the risk of being caught, they will try to steal higher priced goods. The owner estimates during the first year of operations, each shoplifter will be caught with on the average $10.96 of merchandise. This average will also increase at 35 cents a per year. The system costs $1,195.60 installed and has a life of five years. What is the rate of return on this investment
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