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Managers are uncertain about the impact of an investment in a robot barista. It will save wages and human resources work but it may turn
Managers are uncertain about the impact of an investment in a robot barista. It will save wages and human resources work but it may turn off customers and if it breaks down could turn away customers who lose faith in the operation. It may also be a turn off to people who would rather receive a good morning from a nice person than a beep and a buzz from a machine. At time zero the investment is made. It takes one year for the machine to become integrated and impact cash flows. The Starbucks factor begins to impact cash flows at end of year 1. Set the random number generator so that it gives a number between 1 and 10 inclusive. When the number is greater than 7 we say that Starbucks will open. In other words we are attaching a 3 out of 10 or 30% chance that Starbucks opens. Net cash flows will be between $1,000 and $3,000 per week from years 1-10 if Starbucks does not open within a ten block radius. If Starbucks does open within a ten block radius net cash flow will be between $750 and $1,250 from years 1-10. The machine costs $10
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