QUESTION $2[60]$

Comparing in$-$house development with outsourcing the development of the order tracking and

delivery system is not the only factor that determines whether Telescopic will outsource this

functionality to subcontractors. A decision to neither incorporate an order tracking and delivery

system via in$-$house development nor outsource it$,$ but instead join an existing delivery service

like Uber Eats, holds cost implications. For example, the initial setup cost of designing their own

order tracking and delivery system will be high due to procuring the technological infrastructure

and operational setup. Conversely, the setup cost to join a platform like Uber Eats is minimal due

to platform onboarding $($Deliverect$,2024).$ The cash inflows generated are partially measured by

clients who sign up to occasionally donate to the hunger relief programme while ordering a meal

for themselves.

$2\mathrm{.}1.$ Examine the cash flow of Project O as illustrated in Table $1.$

Table $1$: Project O $$ joining the order and delivery system of Uber Eats.

Year Cash flow Cumulative Cash Flow

$0-$R$55000\mathrm{.}00$

$1$ R$23000\mathrm{.}00$

$2$ R$34000\mathrm{.}00$

$3$ R$52000\mathrm{.}00$

$4$ R$65000\mathrm{.}00$

$5$ R$77000\mathrm{.}00$

$2\mathrm{.}1\mathrm{.}1.$ Calculate the annual cumulative $($Years $05)$ cash flow. $(6)$

$2\mathrm{.}1\mathrm{.}2.$ Calculate the payback period to the closest$4$ approximate year, month and day

$($illustrate the formula and sequence of calculations$).$

$(8)$

$2\mathrm{.}2.$ Examine the cash flow of Project T as illustrated in Table $2.$

Table $2$: Project T $$ Culinary Bargain creates own order tracking and delivery system.

Year Cash flow Cumulative Cash Flow

$0-$R$98000\mathrm{.}00$

$1$ R$23000\mathrm{.}00$

$2$ R$34000\mathrm{.}00$

$3$ R$52000\mathrm{.}00$

$4$ R$65000\mathrm{.}00$

$5$ R$77000\mathrm{.}00$

$4$ Refer to the entry titled $$The subtraction $(-)$ symbol in payback period calculations$$ in the

Announcements section of the INF$3708$ module site to help you calculate the payback period to the

closest approximate year, month, and day.

$8$

INF$3708-24-$Y$-$ASSESSMENT $3$

$2\mathrm{.}2\mathrm{.}1.$ Calculate the annual cumulative $($Years $05)$ cash flow. $(6)$

$2\mathrm{.}2\mathrm{.}2.$ Calculate the payback period to the closest approximate year, month and day

$($illustrate formula and sequence of calculations$).(8)$

$2\mathrm{.}3.$ Examine the cash flow of Project O as illustrated in Table $1.$ The sub questions below

instruct you to calculate total profit and return on investment $($ROI$5$

$)$; Only write down the

answer, do not display the formula and sequence of calculations leading to the answer.

$2\mathrm{.}3\mathrm{.}1.$ Calculate the net profit. $(2)$

$2\mathrm{.}3\mathrm{.}2.$ Calculate the ROI. Consider cumulative cash flow when performing the calculation

and round your answer to zero decimal places $($i$.$e$.,$ to a whole number$).(6)$

$2\mathrm{.}4.$ Examine the cash flow of Project T as illustrated in Table $2.$ The sub$-$questions below

instruct you to calculate total profit and return on investment $($ROI$)$; only write down the

answer, do not display the formula and sequence of calculations leading to the answer.

$2\mathrm{.}4\mathrm{.}1.$ Calculate the net profit.

$2\mathrm{.}4\mathrm{.}2.$ Calculate the ROI. Consider cumulative cash flow when performing the calculation

and round your answer to zero decimal places $($i$.$e$.,$ to a whole number$).(6)$

$2\mathrm{.}5.$ Examine the cash flow of Project O as illustrated in Table $1.$ The sub$-$questions below

instruct you to calculate the annual discounted cash flow and the net present value $($NPV$)$;

only write down the answer, do not display the formula and sequence of calculations

leading to the answer.

$2\mathrm{.}5\mathrm{.}1.$ Calculate the annual discounted cash flow based on the following discount factors:

Year $0$: $1$; Year $1$: $0\mathrm{.}93$; Year $2$: $0\mathrm{.}86$; Year $3$: $0\mathrm{.}79$; Year $4$: $0\mathrm{.}73$; Year $5$: $0\mathrm{.}68.$

$(6)$

$2\mathrm{.}5\mathrm{.}2.$ Calculate the total discounted cash inflow. $(2)$

$2\mathrm{.}5\mathrm{.}3.$ Calculate the NPV$.(2)$

$2\mathrm{.}6.$ Examine the cash flow of Project T as illustrated in Table $2.$ The sub$-$questions below

instruct you to calculate annual discounted cash flow and the NPV; only write down the

answer, do not display the formula and sequence of calculations leading to the answer.

$2\mathrm{.}6\mathrm{.}1.$ Calculate the NPV based on the following discount factors: Year $0$: $1$; Year $1$: $0\mathrm{.}93$;

Year $2$: $0\mathrm{.}86$; Year $3$: $0\mathrm{.}79$; Year $4$: $0\mathrm{.}73$; Year $5$: $0\mathrm{.}68.(4)$

$2\mathrm{.}7.$ Based on calculations performed for the questions above, Ryan observes that Project O

appears to be the best project to pursue by virtue of having a quicker payback period and

a higher ROI and NPV in comparison to Project T$.$ According to Ryan, some of the reasons

for pursuing Project O are as follows: $($i$)$ Uber Eats already has a vast user base, which

will likely boost Culinary Bargain$$s existing sales and create strong exposure for the

hunger relief programme; $($ii$)$ Culinary Bargain can rely on the existing and functioning

$5$ Adapt Schwalbe$$s $(2019,$ p$.165)$ ROI formula to reach the correct answer.

$9$

INF$3708-24-$Y$-$ASSESSMENT $3$

delivery logistics of Uber Eats, which reduces operational burden; and $($iii$)$ Uber Eats

provides continuous technical support for smooth and secure operation.

$2\mathrm{.}7\mathrm{.}1.$ While Project T$$s payback period, ROI, and NPV are not as impressive as those

of