Question 2/100
Restaurant POS Switch
5 minFormula: NPV (Net Present Value)Difficulty: Medium
Prompt
Your client is Harbour Grill Group, a U.S. casual-dining restaurant operator running 25 locations and evaluating a chain-wide switch to a new cloud-based point-of-sale (POS) system.
The CFO wants to confirm both NPV and simple payback on the switch clear corporate thresholds before approving the rollout.
You are asked to:
Calculate the NPV of the POS switch, valuing the savings as a perpetuity
Calculate the simple payback period
Determine whether the switch meets the CFO's thresholds
The CFO wants the switch to deliver NPV of at least $5M AND pay back in 3 years or fewer.
Additional Info:
Harbour Grill POS Switch Economics
| Item | Value |
|---|---|
| Upfront Switch Investment (Hardware + Training) (one-time cost, no later refresh cycles) | $2,000,000 |
| Annual Net Operating Savings (Lower transaction fees, labor savings) (Year 1 onwards, in perpetuity; at current transaction volumes, no throughput growth) | $800,000 |
| Discount Rate | 10.0% |