NOTE I DON'T WANT THE ANSWER TO BE HANDWRITING ALSO, THIS ME SECOND TIME POSTING THE QUESTION BECAUSE NO ONE ANSWERED ALL THE PARTS, SO PLEASE I WANT THE ANSWER TO BE INCLUDING ALL THE PARTS THANK YOU What would the payback period be for a robotic arm used by McDonald's for food preparation 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 are being introduced at the same time that we are experiencing an ongoing debate in the U S about the merits of a national minimum wage of $15 per hour for every worker A former McDonalds USA CEO, Ed Rensi, recently said that purchasing a $35,000 robotic arm would be cheaper than paying fast food workers $15 per hour for food preparation tasks like bagging French fries For this hypothetical example, lets make the following assumptions For the cost of the hourly workers, use a total wage rate of $18 per hour to reflect payroll taxes (payroll taxes can add 15 or more to the hourly wage rate ) Assume that freight and installation for the robots initial placement in a McDonalds restaurant will be a one time cost of $5,000 The robot will require periodic service Assume an annual service contract is required that costs 10 of the original cost plus installation of the robot per year Assume that the robot will replace 10 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 ) Electricity and supplies consumed by the robot will be assumed to be $1,500 per year Questions What would the payback period be on a McDonalds robot used for food preparation What qualitative factors would McDonalds need to consider when deciding whether to purchase robots to replace some of its food preparation workers 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

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 10, 2024

NOTE: I DON'T WANT THE ANSWER TO BE HANDWRITING. ALSO, THIS ME SECOND TIME POSTING THE QUESTION BECAUSE NO ONE ANSWERED ALL THE PARTS, SO

NOTE: I DON'T WANT THE ANSWER TO BE HANDWRITING. ALSO, THIS ME SECOND TIME POSTING THE QUESTION BECAUSE NO ONE ANSWERED ALL THE PARTS, SO PLEASE I WANT THE ANSWER TO BE INCLUDING ALL THE PARTS. THANK YOU!

What would the payback period be for a robotic arm used by McDonald's for food preparation?

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 are being introduced at the same time that we are experiencing an ongoing debate in the U.S. about the merits of a national minimum wage of $15 per hour for every worker. A former McDonalds USA CEO, Ed Rensi, recently said that purchasing a $35,000 robotic arm would be cheaper than paying fast-food workers $15 per hour for food preparation tasks like bagging French fries.

For this hypothetical example, lets make the following assumptions:

	For the cost of the hourly workers, use a total wage rate of $18 per hour to reflect payroll taxes (payroll taxes can add 15% or more to the hourly wage rate.)
	Assume that freight and installation for the robots initial placement in a McDonalds restaurant will be a one-time cost of $5,000.
	The robot will require periodic service. Assume an annual service contract is required that costs 10% of the original cost plus installation of the robot per year.
	Assume that the robot will replace 10 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.)
	Electricity and supplies consumed by the robot will be assumed to be $1,500 per year.

Questions

What would the payback period be on a McDonalds robot used for food preparation?
What qualitative factors would McDonalds need to consider when deciding whether to purchase robots to replace some of its food preparation workers?
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.