Restaurant purchasing a pos systemnance''s restaurant

Reference no: EM13834389

Scenario:

Restaurant Purchasing a POS SystemNance's Restaurant, a local independent restaurant, is evaluating new point-of-sale (POS) systemsand must determine if a new installation is feasible. A new POS installation would includeboth software and hardware, with a total cost of $20,000.Nance's Restaurant is currently operating without a point-of-sale system and utilizes a chitsystem with carbon copy papers that allow the waitstaff to provide a copy to the kitchen andthe customer while retaining a copy for accounting purposes. Management is aware that this isINVESTMENT ANALYSIS 245SNLDeFranco (Wiley)an archaic system and that a POS system will create efficiencies, but they are not sure it isworth the cost.Through analysis, management has determined that a POS system would allow the waitstaffto turn tables quicker, therefore increasing the number of guests serviced and the sales volume.Another advantage of the POS system is that it provides reports to management, allowing themto better analyze their business. Taking all of these factors into consideration, Nance's managementforecasts incremental increases in profit over the next three years of $8,000, $9,000, and$10,000.

Question: Determine the payback period, present value, and net present value of this project for the three-yearperiod, utilizing an 8% discount rate.

Reference no: EM13834389

Questions Cloud

How much did the stock price change over the past year : Shareholders had a good year, earning a 18% annual rate of return. The P/E ratio today is 13.9 and the company just announced earnings per share of $3.20 . The company has a 25% payout ratio. How much did the stock price change over the past year?a. ..

The direct transfer of funds from investors : In the last decade there has been a shift towards the direct transfer of funds from investors to the corporate sector. examine some of the reasons for this trend

Process consists of two welding machines in parallel : Q1) The layout of a process consists of two welding machines in parallel, one grinding and one drilling machine. Two panels are released simultaneously to two welding machines where some parts are fitted to the panels using these welding machines. Th..

Estimated economic life of the machine : On January 1, Year 8, Von Company entered into two non-cancellable leases of new machines for use in its manufacturing operations. The first lease does not contain a bargain purchase option, and the lease term is equal to 80% of the estimated economi..

Restaurant purchasing a pos systemnance''s restaurant : Restaurant Purchasing a POS SystemNance's Restaurant, a local independent restaurant, is evaluating new point-of-sale (POS) systemsand must determine if a new installation is feasible. A new POS installation would includeboth software and hardware, w..

Effective annual rate : Discuss what is meant by the "effective annual rate" when there is more than one compounding period in a year.

Risk measurement terms : Distinguish among the following risk measurement terms: beta, r-squared, covariance, and correlation coefficient.

Market value of a hotel or restaurant investment : In 250 Words explain what are some of the factors used to consider the market value of a hotel or restaurant investment? Other than "location, location, location," is one factor more important than another? Is market value always a good indicator of ..

Prepare a worksheet for a statement of cash flows : Comparative balance sheets at the end of 2010 and 2011, the company's first two years of operations, follow. (Notice that the balances at the end of the current year appear in the right-hand column.) Prepare a worksheet for a statement of cash flows...

User Account

All Pages