Question

1. The table below summarizes the costs and benefits for a new online procurement system. Based on these estimates:
   1. Create a spreadsheet showing the Net Present Value for the costs and benefits listed. Use NPV values for the calculations below.
   2. Calculate the return on investment for this project.
   3. Calculate the payback period for this project.
   4. Calculate the internal rate of return for this project.
2. Based on these calculations would you recommend undertaking this project? Why? What factors other than financial metrics would you consider?
3. Identify 5 risks you think might impact this project and evaluate the importance of each of these risks?

Costs

	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Hardware	$ 200,000.00	$ 100,000.00	$ 50,000.00	$ 10,000.00	$ 10,000.00	$ 75,000.00	$ 75,000.00	$ 10,000.00	$ 10,000.00	$ 10,000.00
Software
Development	$ 400,000.00	$ 400,000.00	$ 75,000.00	$                 -	$                 -	$                 -	$                 -	$                 -	$                 -	$                 -
Licenses	$ 200,000.00	$    20,000.00	$ 20,000.00	$ 20,000.00	$ 20,000.00	$ 20,000.00	$ 20,000.00	$ 20,000.00	$ 20,000.00	$ 20,000.00
Maintenance	$                 -	$                 -	$ 25,000.00	$ 50,000.00	$ 50,000.00	$ 200,000.00	$ 50,000.00	$ 50,000.00	$ 50,000.00	$ 50,000.00

Benefits

Reduce Operating Budget of $12,000,000 by 10% per year after year 3

Answer 1