Purpose of Workbook

To analyze the results of different scenarios under which a decision can be made on whe
Summary of Workbook
Worksheet
Content
Table of Contents
Description of the contents of the workbook
Costs
List of implementation and maintenance cost
Benefits
List of all recurring benefits
Cost Benefit Analysis Contains calculations related to cost benefit analysis and econom
Break Even Chart
Contains break even chart for the project
Workbook created by
Edward Cao
Last Modified Date
10/22/2014

can be made on whether a legacy system can be replaced with a new SAP implementation

analysis and economic feasibility of the project

Implementation Cost
Software License
Hardware
Network and Communication Upgrades
Training
Configuration and Implementation
Total Implementation Cost

Dollar Amount
$500,014
$75,014
$25,014
$25,014
$2,750,014
$3,375,070

Maintenance Cost
Software License Maintenance Fee
New IT Employees (2 X 90,000)
Total Maintenance Cost

Dollar Amount
$80,014
$180,014
$260,028

Benefits
Increased Profit due to Increased Sales
Reduced Inventory Hold Costs
Reduction in Clerical Workforce (4 X 55,000)
Total Benefit Cost

Dollar Amount
$750,014
$250,014
$220,014
$1,220,042

Discount Rate

15.0000%
Year
0

$3,375,070
$0
1
$3,375,070

$0
$260,028
0.8696
$226,111

$0
$260,028
0.7561
$196,619

$0
1
$0

$1,220,042
0.8696
$1,060,906

$1,220,042
0.7561
$922,527

Net Benefit (Cost)

$3,375,070

$834,795

$725,909

Overall Net Present Value

(Present Value of All Benefits)
(-Present Value of All Costs)

$3,375,070

$2,540,275

$1,814,367

Costs
Implementation Cost
Maintenance Cost
Present Value Factor
Present Value of Costs

Benefits
Recurring Benefits
Present Value Factor
Present Value of Benefits

$0
$260,028
0.6575
$170,973

$0
$260,028
0.5718
$148,672

$0
$260,028
0.4972
$129,280

$0
$260,028
0.4323
$112,417

$0
$260,028
0.3759
$97,754

$1,220,042
0.6575
$802,197

$1,220,042
0.5718
$697,563

$1,220,042
0.4972
$606,576

$1,220,042
0.4323
$527,458

$1,220,042
0.3759
$458,659

$631,225

$548,891

$477,297

$415,041

$360,905

$1,183,142

$634,251

$156,954

$258,086

$618,991

10

11

12

$0
$260,028
0.3269
$85,004

$0
$260,028
0.2843
$73,916

$0
$260,028
0.2472
$64,275

$0
$260,028
0.2149
$55,891

$0
$260,028
0.1869
$48,601

$1,220,042
0.3269
$398,834

$1,220,042
0.2843
$346,812

$1,220,042
0.2472
$301,576

$1,220,042
0.2149
$262,240

$1,220,042
0.1869
$228,035

$313,830

$272,896

$237,301

$206,349

$179,433

$932,821

$1,205,717

$1,443,018

$1,649,367

$1,828,800

13

14

15

16

17

$0
$260,028
0.1625
$42,262

$0
$260,028
0.1413
$36,749

$0
$260,028
0.1229
$31,956

$0
$260,028
0.1069
$27,788

$0
$260,028
0.0929
$24,163

$1,220,042
0.1625
$198,291

$1,220,042
0.1413
$172,427

$1,220,042
0.1229
$149,936

$1,220,042
0.1069
$130,380

$1,220,042
0.0929
$113,373

$156,029

$135,677

$117,980

$102,592

$89,210

$1,984,829

$2,120,507

$2,238,487

$2,341,079

$2,430,289

18

19

20

$0
$260,028
0.0808
$21,012

$0
$260,028
0.0703
$18,271

$0
$260,028
0.0611
$15,888
$5,002,671

$1,220,042
0.0808
$98,586

$1,220,042
0.0703
$85,727

$1,220,042
0.0611
$74,545
$7,636,647

$77,574

$67,456

$58,657

$2,507,863

$2,575,319

$2,633,976

$2,633,976

Year
Overall Net Present Value

0
$3,375,070

1
$2,540,275

2
$1,814,367

Based on the results, the project is e

$3,000,000

$2,000,000

$1,000,000

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

3
$1,183,142

4
$634,251

5
$156,954

6
$258,086

7
$618,991

n the results, the project is economically feasible after 20 years.

Overall Net Present Value

10

15

8
$932,821

9
$1,205,717

10
$1,443,018

11
$1,649,367

ent Value

15

20

12
$1,828,800

13
$1,984,829

14
$2,120,507

25

15
$2,238,487

16
$2,341,079

17
$2,430,289

18
$2,507,863

19
$2,575,319

20
$2,633,976