Meet EEB, an online hotel reservation service that is a hit among customers! The EEB team is made up of hardworking, motivated employees who've received applause for their fantastic customer service. However, it's time for an upgrade due to more customers, tougher competition, and evolving technology.

Maia, the finance director, has two options on the table

• Option A: Purchase the "Book-Fast" software from a local designer.
• Option B: Buy new computers from abroad, loaded with the "Global Reach" software.

Maia is thinking about doing an "investment appraisal" for both options. What's that, you ask? Let's dive in!

Investment Appraisal is like trying on shoes before you buy them. You want to know whether it's a good idea to invest your money in something. So, you look at factors like the cost, the potential benefits, and how long it will take to get your money back. Essentially, it's a process of evaluating the attractiveness of an investment opportunity.

This is like asking, "How long will it take for these shoes to pay for themselves?" If the shoes help you win a marathon, that prize money might just cover the cost!

(Unfortunately, we don't have the cost and annual cash inflow information, so we can't calculate the payback period here.)

ARR is like looking at how much you're expected to win in each marathon over the lifetime of those shoes. It shows the average annual profit you'll get from your investment, as a percentage of the initial cost.

(We don't have the relevant numbers, so we can't calculate the ARR for Option B here.)