The local supermarket is considering investing in self-checkout kiosks for its customers. The self-checkout kiosks will cost $49,000 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: $14,000 the first year; $21,000 the second year; $25,000 the third year. Assuming a 14% discount rate,

1- what is the NPV of the kiosk investment?

2-Is this a favorable investment? Why or why not?

i Reference Future Value of $1 Periods 2% 4% 8% 16% 1.160 1.346 1% 1.010 1.020 1.030 1.041 1.051 1.062 1.072 1.083 1.094 1.105 1.040 1.082 1.125 1.170 1.217 5% 1.050 1.103 1.158 1.216 1.276 20% 1.200 1.440 1.728 2.074 2.488 1.020 1.040 1.061 1.082 1.104 1.126 1.149 1.172 1.195 1.219 3% 1.030 1.061 1.093 1.126 1.159 1.194 1.230 1.267 1.305 1.344 1.384 1.426 1.469 1.513 1.558 1.806 2.094 2.427 3.262 1.561 1.811 2.100 10% 1.100 1.210 1.331 1.464 1.611 1.772 1.949 2.144 2.358 2.594 6% 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1.689 1.791 1.898 2.012 2.133 2.261 2.397 3.207 4.292 5.743 10.286 14% 1.140 1.300 1.482 1.689 1.925 2.195 2.502 2.853 3.252 3.707 1.265 1.316 1.369 1.423 1.480 1.539 1.601 1.665 1.732 1.801 1.080 1.166 1.260 1.360 1.469 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.720 2.937 3.172 4.661 6.848 10.063 21.725 12% 1.120 1.254 1.405 1.574 1.762 1.974 2.211 2.476 2.773 3.106 3.479 3.896 4.363 4.887 5.474 9.646 17.000 29.960 93.051 1.340 1.407 1.477 1.551 1.629 1.710 1.796 1.886 1.980 2.079 2.653 3.386 4.322 7.040 1.116 1.127 1.138 1.149 1.161 1.220 1.282 1.348 1.489 18% 1.180 1.392 1.643 1.939 2.288 2.700 3.185 3.759 4.435 5.234 6.176 7.288 8.599 10.147 11.974 27.393 62.669 143.371 750.378 1.243 1.268 1.294 1.319 1.346 1.486 1.641 1.811 2.208 2.853 3.138 3.452 3.797 4.177 6.727 10.835 17.449 45.259 2.436 2.826 3.278 3.803 4.411 5.117 5.936 6.886 7.988 9.266 19.461 40.874 85.850 378.721 4.226 4.818 5.492 6.261 7.138 13.743 26.462 50.950 188.884 2.986 3.583 4.300 5.160 6.192 7.430 8.916 10.699 12.839 15.407 38.338 95.396 237.376 1,469.772 2.191 2.666 3.243 4.801 Print Done i Reference Periods 0.961 1% 2% 0.990 0.980 0.980 0.961 0.971 0.942 | 0.924 0.951 0.906 0.942 0.888 0.933 0.871 0.923 0.853 0.914 0.837 0.905 0.820 0.896 0.804 0.887 0.788 0.879 0.773 0.870 0.758 0.861 0.743 0.820 0.673 0.780 0.610 0.742 0.552 0.672 0.453 3% 4% 0.971 0.962 0.943 0.925 0.915 0.889 0.888 0.855 0.863 0.822 0.837 0.790 0.813 0.760 0.789 0.731 0.766 0.703 0.744 0.676 0.722 0.650 0.701 0.625 0.681 0.601 0.661 0.577 0.642 0.555 0.5540.456 0.478 0.375 0.412 0.308 0.307 0.208 Present Value of $1 5% 6% 8% 10% 0.952 0.943 0.926 0.909 0.907 0.890 0.857 0.826 0.864 0.840 0.794 0.751 0.823 0.792 | 0.735 0.683 0.784 0.747 0.681 0.621 0.746 0.705 0.630 0.564 0.711 0.665 0.583 0.513 0.677 0.627 0.540 0.467 0.6450.592 0.500 0.424 0.614 0.558 0.463 0.386 0.585 0.527 0.429 0.350 0.557 0.497 0.397 0.319 0.530 0.469 0.368 0.290 0.505 0.442 0.340 0.263 0.481 0.417 0.315 0.239 0.377 0.312 0.215 0.149 0.295 0.233 0.146 0.092 0.231 0.174 0.099 0.057 0.142 0.097 0.046 0.022 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.104 0.059 0.033 0.011 14% 0.877 0.769 0.675 0.592 | 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.073 0.038 0.020 0.005 16% 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.051 0.024 0.012 0.003 18% 20% 0.847 0.833 0.7180.694 0.609 0.579 0.516 | 0.482 0.437 0.402 0.370 | 0.335 0.314 0.279 0.266 0.233 0.225 0.194 0.191 0.162 0.162 0.135 0.137 0.112 0.116 0.093 0.099 0.078 0.084 0.065 0.037 0.026 0.016 0.010 0.007 0.004 0.001 0.001 Print Done i Reference Periods 3% 1% 1.000 2.010 3.030 4.060 5.101 6.152 7.214 8.286 9.369 10.462 2% 1.000 2.020 3.060 4.122 5.204 6.308 7.434 8.583 9.755 10.950 12.169 13.412 14.680 15.974 17.293 24.297 32.030 40.568 60.402 1.000 2.030 3.091 4.184 5.309 6.468 7.662 8.892 10.159 11.464 12.808 14.192 15.618 17.086 18.599 26.870 36.459 47.575 75.401 6.802 4% 1.000 2.040 3.122 4.246 5.416 6.633 7.898 9.214 10.583 12.006 13.486 15.026 16.627 18.292 20.024 29.778 41.646 56.085 95.026 Future Value of Annuity of $1 5% 6% 8% 10% 1.000 1.000 1.000 1.000 2.050 2.060 2.080 2.100 3.153 3.184 3.246 3.310 4.310 4.375 4.506 4.641 5.526 5.637 5.867 6.105 6.975 7.336 7.716 8.142 8.394 8.923 9.487 9.549 9.897 10.637 11.436 11.027 11.491 12.488 13.579 12.578 13.181 14.487 15.937 14.207 14.972 16.645 18.531 15.917 16.870 18.977 21.384 17.713 18.882 21.495 24.523 19.599 21.015 24.215 27.975 21.579 23.276 27.152 31.772 33.066 36.786 45.762 57.275 47.727 54.865 73.106 98.347 66.439 79.058 113.283 164.494 120.800 154.762 259.057 12% 1.000 2.120 3.374 4.779 6.353 8.115 10.089 12.300 14.776 17.549 14% 1.000 2.140 3.440 4.921 6.610 8.536 10.730 13.233 16.085 19.337 23.045 27.271 32.089 37.581 43.842 91.025 181.871 356.787 1,342.025 16% 1.000 2.160 3.506 5.066 6.877 8.977 11.414 14.240 17.519 21.321 25.733 30.850 36.786 43.672 51.660 115.380 249.214 530.312 2,360.757 18% 1.000 2.180 3.572 5.215 7.154 9.442 12.142 15.327 19.086 23.521 28.755 34.931 42.219 50.818 60.965 146.628 342.603 790.948 4,163.213 20% 1.000 2.200 3.640 5.368 7.442 9.930 12.916 16.499 20.799 25.959 11.567 12.683 13.809 14.947 16.097 22.019 28.243 34.785 48.886 20.655 24.133 28.029 32.393 37.280 72.052 133.334 241.333 767.091 32.150 39.581 48.497 59.196 72.035 186.688 471.981 1,181.882 7,343.858 Print Done Reference Present Value of Annuity of $1 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 Periods 1% 2% 3% 0.990 0.980 0.971 1.970 1.942 1.913 2.941 2.884 2.829 3.902 3.808 3.717 4.853 4.713 4.580 5.795 5.601 5.417 6.728 6.472 6.230 7.652 7.325 7.020 8.566 8.162 7.786 9.471 8.983 8.530 10.368 9.787 9.253 11.255 10.575 9.954 12.134 | 11.348 10.635 13.004 12.106 | 11.296 13.865 12.849 11.938 18.046 16.351 14.877 22.023 19.523 17.413 25.808 22.396 19.600 | 32.835 27.355 23.115 4% 0.962 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 11.118 13.590 15.622 17.292 19.793 5% 6% 8% 10% 12% 14% 16% 18% 0.952 0.943 0.926 0.909 | 0.893 0.877 0.862 0.847 1.859 | 1.833 1.783 1.736 | 1.690 1.647 1.605 1.566 2.723 2.673 2.577 | 2.487 2.402 2.322 2.246 2.174 3.546 3.465 3.312 3.170 3.037 2.914 | 2.798 | 2.690 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 5.076 4.917 4.623 4.355 4.111 3.889 3.685 3.498 5.786 5.582 5.206 | 4.868 4.564 4.288 4.039 3.812 6.463 6.210 5.747 5.335 4.968 4.639 4.344 4.078 7.108 6.802 6.247 5.759 5.328 4.946 | 4.607 4.303 7.722 7.360 6.710 6.145 5.650 5.216 | 4.833 4.494 8.306 7 887 7.139 6.495 5.938 5.453 5.029 4.656 8.863 8.384 7.536 6.814 6.194 5.660 4.793 9.394 8.853 7.904 7.103 6.424 5.842 5.342 4.910 9.899 9.295 8.244 7.3676.628 6.002 5.468 5.008 10.380 9.712 8.559 7.606 6.811 6.142 5.575 5.092 12.462 11.470 9.818 8.514 7.469 6.623 5.9295.353 14.094 12.783 10.675 9.077 7.843 6.873 6.097 5.467 15.372 13.765 11.258 9.4278.055 7.003 6.1775.517 17.159 | 15.046 11.925 9.779 | 8.244 | | 7.105 6.233 5.548 5.197 3.837 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.870 4.948 4.979 4.997 Print Done