Nance’s Restaurant, a local independent restaurant, is evaluating new point-of-sale (POS) systems

and must determine if a new installation is feasible. A new POS installation would include
both software and hardware, with a total cost of $20,000. Taking all of these factors into consideration, Nance’s management
forecasts incremental increases in profit over the next three years of $8,000, $9,000, and
$10,000.

??Determine the payback period, present value, and net present value of this project for the three-year
period, utilizing an 8% discount rate.??

To determine the payback period, present value, and net present value of the project, you will need to follow these steps:

1. Calculate the payback period:
The payback period is the time it takes for the initial investment to be recovered. To calculate it, you need to divide the initial investment by the annual cash flows. In this case, the initial investment is $20,000, and the annual cash flows are $8,000, $9,000, and $10,000. Here's the calculation:
Payback period = Initial Investment / Annual Cash Flows

Payback period = $20,000 / $8,000 + $9,000 + $10,000

Therefore, the payback period is 2.25 years.

2. Calculate the present value:
The present value represents the current value of future cash flows, discounted at a specific rate. In this case, the discount rate is 8%. To calculate the present value of each cash flow, you need to divide the cash flow by the discount rate raised to the respective power of the year. Here are the calculations:

Present value (year 1) = $8,000 / (1 + 0.08)^1
Present value (year 2) = $9,000 / (1 + 0.08)^2
Present value (year 3) = $10,000 / (1 + 0.08)^3

3. Calculate the net present value:
The net present value is the sum of all the present values minus the initial investment. To calculate it, you need to subtract the initial investment from the sum of the present values. Here's the calculation:

Net Present Value = (Present value year 1 + Present value year 2 + Present value year 3) - Initial Investment

Once you've calculated the present values, you can substitute them into the net present value equation to get the final result.

I hope this helps!