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What is the payback period for each POS system

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Reference no: EM133085651

Question - You have the following information about three point of sale systems on the market. The owner of a restaurant asks for your help in deciding which of the three machines to buy.

 

Adamo

Sitaara

Ensolarado

Cash Investment

$6,300

$6,000

$6,700

Estimated Machine Life

5 Years

5 Years

5 Years

Estimated Trade in Value after 5 years

500

0

300

Annual Operating Costs (does not include depreciation)

400

300

300

Annual Savings Before Deduction of Costs

$2,000

$2,000

$2,000

Assume a 30% income tax rate and straight-line depreciation.

a) Use the ARR method to decide which of the three POS systems would be the best investment.

b) If the restaurant wants a return on investment (ROI) of at least 10%, what would you advise?

c) What is the payback period for each POS system?

Reference no: EM133085651

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