Question
An industrial engineer proposed the purchase of an RFID Fixed-Asset Tracking System for the company's warehouse and weave rooms. The engineer felt that the purchase
An industrial engineer proposed the purchase of an RFID Fixed-Asset Tracking System for the company's warehouse and weave rooms. The engineer felt that the purchase would provide a better system of locating cartons in the warehouse by recording the locations of the cartons and storing the data in the computer. The estimated investment, annual operating and maintenance costs, and expected annual saving are as follows: -Cost of equipment and installation: $163,200 -Project life: 6 years -Expected salvage: $22,000 -Investment in working capital (fully recoverable at the end of the project life): $27,000 -Expected annual savings on labor and materials: $59,100 -Expected annual expenses: $9,300 -Depreciation method: five-year MACRS As a part of this project, the firm will take a loan of $47,000 to be repaid in three equal annual payments at 6.4% interest. The firm's marginal tax rate is 21%. Determine the IRR of the RFID system. Express your answer as a percentage rounded to the nearest tenth of a percent (i.e., 8.3% should be entered as 8.3)
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