Refer to the supermarket in S12- 13. What is the approximate internal rate of return (IRR) of the kiosk investment?
In S12- 13
The local supermarket is considering investing in self- checkout kiosks for its customers. The self- checkout kiosks will cost $ 46,000 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; $ 19,000 the second year; $ 26,000 the third year. Assuming a 10% discount rate, what is the NPV of the kiosk investment? Is this a favorable investment? Why or why not?