Project - Analysis and Design
unique12
Cost_Benefit_ClassExample.xlsxFig2_6
| Benefit & Cost example | ||||||
| 2015 | 2016 | 2017 | 2018 | 2019 | Total | |
| Benefits | ||||||
| Increased sales | 500,000 | 530,000 | 561,800 | 595,508 | 631,238 | |
| Reduction in Customer complaint calls | 70,000 | 70,000 | 70,000 | 70,000 | 70,000 | |
| Reduced inventory cost | 68,000 | 68,000 | 68,000 | 68,000 | 68,000 | |
| Total Benefits | 638,000 | 668,000 | 699,800 | 733,508 | 769,238 | |
| PV of Benefits | $619,417.48 | $629,654.07 | $640,416.13 | $651,712.36 | $663,551.46 | $3,204,751.49 |
| PV of all Benefits | $619,417.48 | $1,249,071.54 | $1,889,487.68 | $2,541,200.03 | $3,204,751.49 | |
| Costs | ||||||
| Development Costs | ||||||
| 2 servers@125,000 | 250000 | |||||
| Printer | 100000 | |||||
| Software licenses | 34825 | |||||
| server software | 10945 | |||||
| Development labor | 1236525 | |||||
| Total Development costs | 1632295 | 0 | 0 | 0 | 0 | |
| Operational Costs | ||||||
| Hardware | 54000 | 81,261 | 81,261 | 81,261 | 81,261 | |
| Software | 20000 | 20,000 | 20,000 | 20,000 | 20,000 | |
| Operational labor | 111788 | 116,260 | 120910 | 125746 | 130776 | |
| Total Operational Costs | 185788 | 217521 | 222171 | 227007 | 232037 | |
| Total Costs: | 1818083 | 217521 | 222171 | 227007 | 232037 | |
| PV of Costs | $1,765,129.13 | $205,034.40 | $203,317.94 | $201,692.78 | $200,157.15 | |
| PV of all Costs | $1,765,129.13 | $1,970,163.53 | $2,173,481.47 | $2,375,174.25 | $2,575,331.40 | |
| Benefit-Cost Analysis | ||||||
| Total Project Benefits and Costs | ($1,180,083.00) | $450,479.00 | $477,629.00 | $506,501.00 | $537,201.00 | |
| Yearly NPV | ($1,145,711.65) | $424,619.66 | $437,098.20 | $450,019.58 | $463,394.30 | $629,420.09 |
| Cumulative NPV | ($1,145,711.65) | ($721,091.99) | ($283,993.79) | $166,025.79 | $629,420.09 | |
| Return on Investment | 24.44% | |||||
| Break-even point | 3.63 | in year 4 | ||||
| Intangible benefit | This service is currently provided by competitions | |||||
| Improved customer satisfaction |
Benefit-Cost
PV of all Benefits 619417.47572815535 1249071.5430295032 1889487.6762448444 2541200.0337873856 3204751.4898694912 PV of all Costs 1765129.1262135922 1970163.5309642754 2173481.4685644265 2375174.247850623 2575331.4023527713
