The local supermarket is considering investing in self-checkout kiosks for its c
ID: 2529110 • Letter: T
Question
The local supermarket is considering investing in self-checkout kiosks for its customers. The self-checkout kiosks will cost $49,000 and have no residual value. Management expects the equipment to result in net cash savings over three years as customers grow accustomed to using the new technology: $12,000 the first year; S22,000 the second year, s24 000 the third year. Assuming a 14% discount rate, what is the NPV of the kiosk investment? Is this a favorable investment? Why or why not? (Click the icon to view the present value of an annuity table.) Click the icon to view the present value table.) (Click the icon to view the future value of an annuity table.) (Click the icon to view the future value table.) Round your answer to the nearest whole dollar. Use parentheses or a minus sign for negative net present values.) The NPV is SExplanation / Answer
Calculate net present value :
Net present value = Present value of cash inflow-Present value of cash outflow
= (12000*0.877+22000*0.769+24000*0.675) - 49000
Net present value = -5358
Its not favorable investment
Because its net present value is negative it measn that present value of cash inflow is lower than present value of cash outflow so its not favorable investment
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