Scenario:
Restaurant Purchasing a POS SystemNance's Restaurant, a local independent restaurant, is evaluating new point-of-sale (POS) systemsand must determine if a new installation is feasible. A new POS installation would includeboth software and hardware, with a total cost of $20,000.Nance's Restaurant is currently operating without a point-of-sale system and utilizes a chitsystem with carbon copy papers that allow the waitstaff to provide a copy to the kitchen andthe customer while retaining a copy for accounting purposes. Management is aware that this isINVESTMENT ANALYSIS 245SNLDeFranco (Wiley)an archaic system and that a POS system will create efficiencies, but they are not sure it isworth the cost.Through analysis, management has determined that a POS system would allow the waitstaffto turn tables quicker, therefore increasing the number of guests serviced and the sales volume.Another advantage of the POS system is that it provides reports to management, allowing themto better analyze their business. Taking all of these factors into consideration, Nance's managementforecasts incremental increases in profit over the next three years of $8,000, $9,000, and$10,000.
Question: Determine the payback period, present value, and net present value of this project for the three-yearperiod, utilizing an 8% discount rate.