In: Finance
Develop an economic feasibility analysis, using payback analysis, ROI, and present value (assume a discount rate of 10%) using the table below
System in place |
In-House System |
Vertical Software |
|
Year 1 |
6 hours overtime total $6,480 per employee Support Staff 7 People Plus, new staff member |
12 weeks, hourly salary $35 total $16,800 Commercial package $2,500 10 hrs. weekly training $4200 4 hrs. weekly maintenance $22.5 total of 4,320 Hardware Cost $12,500 |
Vertical package $12,000 4 weeks to install $5,600 10hrs weekly training $4,200 Free Support first year 4 hrs. weekly maintenance $22.5 total of 4,320 Hardware Cost $12,500 |
Year 2 |
6 hours overtime total $6,480 per employee |
4 hrs. weekly maintenance $22.5 total of 4,320 |
Technical Support $600 4 hrs. weekly maintenance $22.5 total of 4,320 |
Year 3 |
6 hours overtime total $6,480 per employee |
4 hrs. weekly maintenance $22.5 total of 4,320 |
Technical Support $600 4 hrs. weekly maintenance $22.5 total of 4,320 |
Year 4 |
6 hours overtime total $6,480 per employee |
4 hrs. weekly maintenance $22.5 total of 4,320 |
Technical Support $600 4 hrs. weekly maintenance $22.5 total of 4,320 |
Year 5 |
6 hours overtime total $6,480 per employee |
4 hrs. weekly maintenance $22.5 total of 4,320 |
Technical Support $600 4 hrs. weekly maintenance $22.5 total of 4,320 |
Total |
$259,200 |
$57,600 |
$58,300 |
Saved in 5 years |
$201,600 |
$200,900 |
System in place | In-House System | Vertical Software | ||||||
year 1 | 51,840 | 12 weeks, hourly salary | 16800 | vetical package | 12000 | 5 | ||
commercial package | 2500 | installation | 5600 | |||||
weekly training | 4200 | weekly training | 4200 | |||||
weekly maintenace | 4320 | weekly maintenace | 4320 | |||||
hardware | 12500 | hardware | 12500 | |||||
40,320 | 38,620 | |||||||
year 2 | Technical Support | 600 | ||||||
51,840 | weekly maintenace | 4320 | weekly maintenace | 4320 | ||||
4920 | ||||||||
year 3 | ||||||||
51,840 | weekly maintenace | 4320 | Technical Support | 600 | ||||
weekly maintenace | 4320 | |||||||
4920 | ||||||||
year 4 | Technical Support | 600 | ||||||
51,840 | weekly maintenace | 4320 | weekly maintenace | 4320 | ||||
4920 | ||||||||
year 5 | 51,840 | Technical Support | 600 | |||||
weekly maintenace | 4320 | weekly maintenace | 4320 | |||||
4920 | ||||||||
2,59,200 | 57,600 | 58,300 | ||||||
saved | - | 2,01,600 | 2,00,900 | compared with system in place | ||||
Payback period | 5 years | 3.50 | 3.45 | |||||
ROI | 64% | 63% | ||||||
Present value | 49,103.47 | 49,287.03 | ||||||
Net Present Value | 8,496.53 | 9,012.97 |