Question
You own Jack-in-the-Box franchises. Given the increase in the minimum wage, you consider replacing human customer service works with ATM-like ordering machine. You believe revenues
You own Jack-in-the-Box franchises. Given the increase in the minimum wage, you consider replacing human customer service works with ATM-like ordering machine. You believe revenues will not change. Today it will cost $250,000 to install the ordering machines in each store. You also estimate it will cost an additional $10,000 per year to maintain and power the machines per year starting a year from today. On the other hand, if you keep your existing employees, you will have no costs today. However, you will need to pay the employees $45,000 per year (starting a year from today). If you think the machines will last 10 years, your discount rate is 6%, your tax rate is 30%, the equipment has no salvage value, and you use straight line depreciation for any initial investments, should you install the machines (need numerical proof for a correct answer)?
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