Husker Co, a Major Drug Store Chain, Plans to Spend $35

Short Answer

Husker Co., a major drug store chain, plans to spend $35 million in capital investments for its new inventory loss reduction initiative. By upgrading the current inventory tracking system using advanced RFID technology, the company estimates the annual maintenance cost of $210,000. The salvage value of the system at the end of year 13 is expected to be 0.4% of the original investment. What is the minimum annual inventory loss prevention required to make this investment economically acceptable if the company's minimum attractive rate of return is 8% per year.