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McTaco Inc. is considering the purchase of a new touch screen order system for its drive-thru window. The new equipment will streamline the order process by allowing customers to place their order as they arrive, which will reduce customer wait time and increase order accuracy. The new system would cost McTaco $150,000 and would last for five years, after which it will be useless, with no residual value. The annual maintenance cost is $5,000. In addition to improving its customer service, McTaco would gain two additional benefits. First, McTaco would eliminate a full-time worker who currently accepts and enter orders. The annual salary plus benefits total $30,000 per year. Second, McTaco expects annual sales to increase by $15,000, due to improved customer satisfaction and reduced customer wait time. Cost of goods sold (COGS) is 25% of sales. The appropriate discount rate is 15%. There are no taxes. Should McTaco make this investment?

Reference no: EM132686923

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