Table of Contents

CONTENTS:
1. One time costs

The one-time cost worksheet lists the one-time costs for the project contained in Tabl
2. Recurring Costs

The recurring cost worksheet lists the recurring costs of the project contained in Tabl
3. Recurring Benefits

The recurring benefits worksheet lists the recurring benefits of the project contained
4. Economic Feasibility

For each year of the project many aspects has been calculated. These include the recurring
5. Break-Even Chart

A graphical chart depicting the break-even point for the project has been created.
6.Purpose

To figure out how different discount rates affect the final outcome, to analyze the economi
7. Date Last Modified: 10/25/2013
8. Name of the Creater: Rupesh Karn
The questions along with answers are attached in a word document

e project contained in Table 1.

e project contained in Table 2.

ts of the project contained in Table 3.

These include the recurring value of the benefits, the present value factor for the given year, the present value

t has been created.

me, to analyze the economic feasibility of replacing the existing suite of applications with SAP, and to determ

ven year, the present value of the benefits, the net present value of all benefits, the one-time costs, the recurrin

ns with SAP, and to determine whether the company should continue on with their business.

one-time costs, the recurring costs, the present value factor for the given year, the present value of the recurrin

business.

present value of the recurring costs, the net present value of all costs, the overall net present value, yearly NPV

et present value, yearly NPV cash flow, and overall NPV cash flow for the proposed project. A separate cell to

d project. A separate cell to capture the discount rate has been included .

One time Costs

From Table 1, we have:

One-Time Costs
Software Licenses
Hardware
Network and Communications
Upgrades
Training
Configuration and Implementation
Total
Table 1-One Time Costs

Dollar Amount
$500,500
$75,500
$25,500
$25,500
$1,750,500
$2,377,500

Recurring Costs
From Table 2,
We have,
Recurring Costs
Software License Maintenance Fees
New IT Employees (2 80,250)
Total
Table 2-Recurring Costs

Dollar Amount
80,500
$160,500
241,000

Year 1
Year 2
Year 3
Year 4
Year5
80500
80500
80500
80500
80500
160500
160500
160500
160500
160500
241000
241000
241000
241000
241000

Recurring Benefits
From Table 3, we have
Recurring Benefits
Increased Profit Due to Increased Sales
Reduced Inventory Holdings Costs
Reduction in clerical workforce (4 50,125)
Total Recurring Benefits
Table 3-Recurring Benefits.

Dollar Amount
$750,500
$250,500
$200,500
$1,201,500

Yeart 1
$750,500
$250,500
$200,500
$1,201,500

Year2
$750,500
$250,500
$200,500
$1,201,500

Year3
$750,500
$250,500
$200,500
$1,201,500

Year4
$750,500
$250,500
$200,500
$1,201,500

Year5
$750,500
$250,500
$200,500
$1,201,500

Economic Feasibility
Discount Rate

0.14
YEAR
0

Benefits
Recurring Value of Benefits
Present Value factor
Present Value of Benefits
Net Present Value of All Benefits

$0.00
$1,201,500
$1,201,500
1
0.877192982 0.769467528
$0.00
1053947.368 924515.2355
$0.00 $1,053,947.37 1978462.604

Costs
One-Time Costs
Recurring Costs
Present Value Factor
Present Value of the Recurring Costs
Net Present Value of All Costs

$2,377,500
0
1
2377500
2377500

$0
$0
$241,000
$241,000
0.877192982 0.769467528
211403.5088 185441.6744
2588903.509 2774345.183

Overall Net Present Value

($2,377,500.00)

(1534956.14)

Cash Flow Analysis

Yearly NPV Cash Flow
Overall NPV Cash Flow

($2,377,500.00)
($2,377,500.00)

842543.8596 739073.5611
(1534956.14) (795882.58)

29%

($2,377,500)

$960,500

(795882.58)

$960,500

3
$1,201,500
0.67497152
810978.277
2789440.88

$1,201,500 $1,201,500 $6,007,500.00

0.59208028 0.51936866
711384.453 624021.45
3500825.33 4124846.78

$0
$0
$0
$241,000
$241,000
$241,000
0.67497152 0.59208028 0.51936866
162668.135 142691.347 125167.848
2937013.32 3079704.67 3204872.51
(147572.44) 421120.67

919974.27

648310.141 568693.106 498853.602

(147572.44) 421120.67 919974.27

$960,500

Total

$960,500

$960,500

$2,377,500
1205000

Times New Roman

Break-Even Chart

years
Net Present Value of All Benefits
Net Present Value of All Costs

0
$0.00
2377500

1
1053947
2588904

2
1978463
2774345

3
2789441
2937013

4
3500825
3079705

3500000
3000000
2500000
2000000
1500000
1000000
500000
0
0

5
4124847
3204873
4500000
4000000
3500000
3000000
2500000
2000000
1500000
1000000
500000
0
5

Net Present Value of All

Costs
Net Present Value of All
Benefits