A former Yummy Burger USA CEO, John Wilson, said that purchasing a $38,000 robotic arm would...
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A former Yummy Burger USA CEO, John Wilson, said that purchasing a $38,000 robotic arm would be cheaper than paying fast-food workers $14 per hour for food preparation tasks like bagging French fries. To test the former CEO's assertion using a hypothetical example, make the following assumptions: a. For the cost of the hourly workers, use a total wage rate of $17 per hour to reflect payroll taxes (the hourly wage rate used here is higher than $14 since payroll taxes can add 15% or more to the hourly wage rate). b. Assume that freight and installation for the robot's initial placement in a Yummy Burger restaurant will be a one-time cost of $5,300. c. The robot will require annual maintenance service. Assume an annual service contract is required that costs 10% of the original robot cost including the original freight/installation. d. Assume that the robot will replace 12 employee hours per day, 360 days per year (the robot will not, at least initially, be as versatile as a person and cannot fully eliminate all food prep workers at this point). e. Electricity and supplies consumed by the robot will be assumed to be $1,900 per year. A variety of robots were featured at the 2016 National Restaurant Show that could be used for a variety of tasks in restaurants. These robots were introduced at the same time that an ongoing debate ensued in the United States about the merits of a national minimum wage of $14 per hour for every worker. a (Click the icon to view additional information.) Read the requirements. Requirement 1. What would the payback period be on a Yummy Burger robot used for food preparation? (Round your answer to two decimal places.) Initial investment I|Expected annual net cash inflow = Payback period years Requirement 2. What qualitative factors would Yummy Burger need to consider when deciding whether to purchase robots to replace some of its food preparation workers? (Select only those that apply. If a box is not used in the table leave the box empty; do not select a label.) Qualitative factors to consider include: The impact of replacing people with machines would have with customers. Requirement 3. Given the payback period, would net present value (NPV) or internal rate of return (IRR) be likely to be useful tools for analyzing this decision? Support your response. Neither NPV or IRR are likely to be useful tools for analyzing this decision since the payback period is more than one year. A former Yummy Burger USA CEO, John Wilson, said that purchasing a $38,000 robotic arm would be cheaper than paying fast-food workers $14 per hour for food preparation tasks like bagging French fries. To test the former CEO's assertion using a hypothetical example, make the following assumptions: a. For the cost of the hourly workers, use a total wage rate of $17 per hour to reflect payroll taxes (the hourly wage rate used here is higher than $14 since payroll taxes can add 15% or more to the hourly wage rate). b. Assume that freight and installation for the robot's initial placement in a Yummy Burger restaurant will be a one-time cost of $5,300. c. The robot will require annual maintenance service. Assume an annual service contract is required that costs 10% of the original robot cost including the original freight/installation. d. Assume that the robot will replace 12 employee hours per day, 360 days per year (the robot will not, at least initially, be as versatile as a person and cannot fully eliminate all food prep workers at this point). e. Electricity and supplies consumed by the robot will be assumed to be $1,900 per year. A variety of robots were featured at the 2016 National Restaurant Show that could be used for a variety of tasks in restaurants. These robots were introduced at the same time that an ongoing debate ensued in the United States about the merits of a national minimum wage of $14 per hour for every worker. a (Click the icon to view additional information.) Read the requirements. Requirement 1. What would the payback period be on a Yummy Burger robot used for food preparation? (Round your answer to two decimal places.) Initial investment I|Expected annual net cash inflow = Payback period years Requirement 2. What qualitative factors would Yummy Burger need to consider when deciding whether to purchase robots to replace some of its food preparation workers? (Select only those that apply. If a box is not used in the table leave the box empty; do not select a label.) Qualitative factors to consider include: The impact of replacing people with machines would have with customers. Requirement 3. Given the payback period, would net present value (NPV) or internal rate of return (IRR) be likely to be useful tools for analyzing this decision? Support your response. Neither NPV or IRR are likely to be useful tools for analyzing this decision since the payback period is more than one year.
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