A small café is considering replacing one of its waitstaff with a ‘robot’ – a device...

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A small café is considering replacing one of its waitstaff witha ‘robot’ – a device that will take orders, deliver food andinteract with customers in an entertaining way. The cost of therobot is $225,000. From the salary savings and the extra customersthe robot is expected to attract, it is estimated that the netinflows from the idea will be: • Year 1: $95,100 • Year 2: $80,000• Year 3: $60,000 • Year 4: $55,000 It is expected that noveltywill lessen over time, and after four years the robot will beworthless and superseded with a newer model.
TASK 1: Using the formulas and examples from the Week 10lecture, perform a cost benefit analysis by calculating the paybackperiod (PBP), the return on investment (ROI), the Net Present Value(NPV) and the Internal Rate of Return (IRR). Assume the desiredrate of return is 12%.

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1 PAYBACK PERIOD Year Cash flows Cumulative Cash Flows 0 225000 225000 1 95100 129900 2 80000 49900 3 60000 10100 4 55000 65100 Payback period 24990060000 283 Years 2 RETURN ON INVESTMENT See Answer

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A small café is considering replacing one of its waitstaff witha ‘robot’ – a device that will take orders, deliver food andinteract with customers in an entertaining way. The cost of therobot is $225,000. From the salary savings and the extra customersthe robot is expected to attract, it is estimated that the netinflows from the idea will be: • Year 1: $95,100 • Year 2: $80,000• Year 3: $60,000 • Year 4: $55,000 It is expected that noveltywill lessen over time, and after four years the robot will beworthless and superseded with a newer model.TASK 1: Using the formulas and examples from the Week 10lecture, perform a cost benefit analysis by calculating the paybackperiod (PBP), the return on investment (ROI), the Net Present Value(NPV) and the Internal Rate of Return (IRR). Assume the desiredrate of return is 12%.