| Gray cells contain calculations that should not be altered. |
| THINKING CAPS TUTORING |
| Technology Budgeting Tool |
| Company Data |
| Required rate of return | 10% |
| Tax rate | 30% |
| Initial Investment | YEAR | 1 | 2 | 3 |
| Hardware costs (e.g., servers, networking hardware, PC upgrades) | $75,000 | $20,000.00 | $25,000.00 | $35,000.00 |
| Purchased software costs / licenses (e.g., e-commerce, ERP, CRM software) | $17,500 | $5,000.00 | $6,000.00 | $6,500.00 |
| Development costs (e.g., systems design and configuration / development) | $59,000 | $8,000.00 | $16,000.00 | $35,000.00 |
| Training costs (e.g., develop and conduct initial training) | $26,000 | $6,000.00 | $8,000.00 | $12,000.00 |
| Payroll | $45,000 | $14,000.00 | $15,000.00 | $16,000.00 |
| Rent for 2 locations | $5,000 | $1,500.00 | $1,700.00 | $1,800.00 |
| Insurance | $3,000 | $800.00 | $1,100.00 | $1,100.00 |
| Total Initial Investments | $230,500 | $55,300.00 | $72,800.00 | $107,400.00 |
| Benefits from Technology Strategy | YEAR | 1 | 2 | 3 |
| Increased sales and revenue | | $40,000 | $61,000 | $135,000 |
| Reduced personnel costs | | $0 | $0 | $0 |
| Reduced product costs | | $0 | $0 | $0 |
| Reduced distribution costs | | $0 | $0 | $0 |
| Reduced advertising and marketing costs | | $5,000 | $8,000 | $15,000 |
| [Other benefits] | | $0 | $0 | $0 |
| [Other benefits] | | $0 | $0 | $0 |
| [Other benefits] | | $0 | $0 | $0 |
| Total Benefits | | $45,000 | $69,000 | $150,000 |
| Costs (Excluding Initial Capital Investments) | YEAR | 1 | 2 | 3 |
| Depreciation on capital expenditures (calculation uses three-year period) | | $76,833 | $76,833 | $76,833 |
| Software licensing fees | | $0 | $0 | $0 |
| Ongoing user support and training (e.g., help desk and training personnel) | | $0 | $0 | $0 |
| Ongoing systems support (e.g., IT maintenance) | | $0 | $0 | $0 |
| Hosting / Cloud computing | | $0 | $0 | $0 |
| General and administrative | | $0 | $0 | $0 |
| [Other costs] | | $0 | $0 | $0 |
| [Other costs] | | $0 | $0 | $0 |
| [Other costs] | | $0 | $0 | $0 |
| Total Costs | | $76,833 | $76,833 | $76,833 |
| Totals | YEAR | 1 | 2 | 3 |
| Net Benefits (Costs) | | ($31,833) | ($7,833) | $73,167 |
| Tax | | ($9,550) | ($2,350) | $21,950 |
| Value after tax | | ($22,283) | ($5,483) | $51,217 |
| Depreciation added back | | $76,833 | $76,833 | $76,833 |
| Cash flow | ($230,500) | $54,550 | $71,350 | $128,050 |
| Cumulative cash flow | ($230,500) | ($175,950) | ($104,600) | $23,450 |
| Evaluation Metrics | |
| Net present value (NPV) | ($25,736) |
| Internal rate of return (IRR) | 4.35% |
| Payback period (in years) | 2.82 |
| Three-year total ROI: (total benefits before taxes - total costs)/total costs | 14.53% |
Bricef02r
Returnoninvestmentexample.xlsx
