| Gray cells contain calculations that should not be altered. |
| Cow Wow Serial Company |
| Technology Budgeting Tool |
| 2/19/17 |
| Company Data |
| Required rate of return | 10% |
| Tax rate | 30% |
| Initial Investment | YEAR | 1 | 2 | 3 |
| Groundwork Costs | $30,000 |
| Machinery Costs | $20,000 |
| Products Cost | $30,000 |
| Manufacturing Cost | $20,000 |
| Resources Cost | $5,000 |
| Marketing Costs | $15,000 |
| Total Initial Investments | $120,000 |
| Benefits from Technology Strategy | YEAR | 1 | 2 | 3 |
| Increased Sales and Revenue | | $50,000 | $75,000 | $100,000 |
| Reducing Marketing Costs | | $15,000 | $12,000 | $20,000 |
| Reduced personnel costs | | $10,000 | $10,000 | $10,000 |
| Reduced product costs | | $20,000 | $25,000 | $30,000 |
| Reduced distribution costs | | $10,000 | $15,000 | $20,000 |
| Reduced Advertising Costs | | $15,000 | $10,000 | $30,000 |
| Total Benefits | | $120,000 | $147,000 | $210,000 |
| Costs (Excluding Initial Capital Investments) | YEAR | 1 | 2 | 3 |
| Depreciation on capital expenditures (calculation uses three-year period) | | $30,000 | $30,000 | $30,000 |
| Software licensing fees | | $15,000 | $15,000 | $15,000 |
| Support for System | | $20,000 | $20,000 | $20,000 |
| General and Administrative | | $20,000 | $20,000 | $20,000 |
| Total Costs | | $85,000 | $85,000 | $85,000 |
| Totals | YEAR | 1 | 2 | 3 |
| Net Benefits (Costs) | | $35,000 | $62,000 | $125,000 |
| Tax | | $10,500 | $18,600 | $37,500 |
| Value after tax | | $24,500 | $43,400 | $87,500 |
| Depreciation added back | | $30,000 | $30,000 | $30,000 |
| Cash flow | ($120,000) | $54,500 | $73,400 | $117,500 |
| Cumulative cash flow | ($120,000) | ($65,500) | $7,900 | $125,400 |
| Evaluation Metrics | |
| Net present value (NPV) | $78,486 |
| Internal rate of return (IRR) | 39.54% |
| Payback period (in years) | 1.89 |
| Three-year total ROI: (total benefits before taxes - total costs)/total costs | 87.06% |
rahul vasava
roiweek6.xlsx
