Identify the ROI and NPV of the wireless order-taking system. Provide all calculations for the ROI and NPV in the speaker notes. Discuss some of the intangibles Lisa needs to consider and make a recommendation as to whether Lisa should order such a system.
To determine the ROI (Return on Investment) and NPV (Net Present Value) of the wireless order-taking system, we need some financial information such as the initial investment, annual cash flows, discount rate, and the project's lifespan. Unfortunately, in this text-based conversation, I don't have access to specific financial data.
However, I can guide you on how to calculate the ROI and NPV if you provide the necessary information. Here's how you can calculate them:
1. Return on Investment (ROI):
ROI is calculated using the formula: ROI = (Net Profit / Initial Investment) * 100
- Determine the annual net profit generated by the wireless order-taking system.
- Divide the net profit by the initial investment.
- Multiply the result by 100 to get the ROI percentage.
2. Net Present Value (NPV):
NPV calculates the present value of all projected cash flows associated with the system. The formula for NPV is:
NPV = ∑ [CFt / (1+r)^t] - Initial Investment
- Determine the annual cash flows generated by the wireless order-taking system.
- Discount each cash flow to its present value using the discount rate (r) and the time period (t).
- Sum up all the present values of the cash flows.
- Finally, subtract the initial investment from the total present value.
Intangibles are the non-quantifiable factors that should be considered alongside financial measures. In the case of the wireless order-taking system, some intangibles Lisa needs to consider may include:
- Improved customer service and satisfaction.
- Increased efficiency in order processing.
- Reduction in human error and order mistakes.
- Potential increase in sales volume.
- Enhanced brand image and reputation.
To make a recommendation, it would be helpful to know the financial figures and the intangibles. Without that information, it is challenging to assess the viability of the wireless order-taking system. Nevertheless, Lisa should evaluate both the financial aspects and intangibles to make an informed decision.
Note: To calculate ROI and NPV precisely, it is necessary to have accurate and specific financial data.