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The local supermarket is considering investing in self-checkout kiosks for its customers. The self-checkout kiosks...

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Accounting

The local supermarket is considering investing in self-checkout kiosks for its customers. The self-checkout kiosks will cost $47,500and 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: $13,000 the first year; $21,000 the second year; $24,000 the third year.

Assuming a 14% discount rate, what is the NPV of the kiosk investment?

Is this a favorable investment? Why or why not?

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