Economic Feasibility Assessment WorkBook for

Extreme Mountain Bikes

This workbook contains the following sheets

1. One time costs
2. Recurring Costs
3.Recurring Benefits
4. Ecnomic Feasibility
Purpose
The purpose of this workbook is to analyze the economic feasibility of
replacing the current hardware and software with SAP as it was
requested by the founder Bob Cooper
Tips
First three sheets listed above contain the data required to finalize
assessment. If any change is required, these first three should be
used accordingly.
Author: Michelle Pakes
Last Modified 10/13/2014

One-Time Costs
Software Licenses
Hardware
Network And Communications Upgrades
Training
Configuration and Implementation
Total

Dollar Amount
($500,000)
($75,000)
($25,000)
($25,000)
($2,750,000)
($3,375,000)

Recurring Costs
Software License Maintenance Fees
New IT Employees (2x90,000)
Total

($80,000)
($180,000)
###

Recurring Benefits
Increased Profit Due to Increased Sales
Reduced Inventory Holding Costs
Reduction in Clerical Workforce
Total

Dollar Amount
$
750,000
$
250,000
$
220,000
$

1,220,000

Discount Rate 15%

0

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

Recurring Benefits
Present Value Factor
Present Value of Benefits
Net Present Value of All Benefits

$
$
$
$

($3,375,000)
$0
1.000 $
($3,375,000)
($3,375,000)

$0
($260,000)
0.870
($226,087)
($3,601,087)

Benefits
1.000
-

$
$
$
$

1,220,000
0.870
1,060,870
1,060,870

Overall Net Present Value

Cash Flow Analysis

Yearly NPV Cash Flow
Overall Cash Flow

($3,375,000)

($2,540,217)

($3,375,000)
($3,375,000)

$834,783
($2,540,217)

$0
($260,000)
0.756 $
($196,597)
($3,797,684)

$0
($260,000)
0.658 $
($170,954)
($3,968,639)

$0
($260,000)
0.572 $
($148,656)
($4,117,294)

$0
($260,000)
0.497 $
($129,266)
($4,246,560)

$
$
$
$

1,220,000
0.756
922,495
1,983,365

1,220,000
0.658
802,170
2,785,535

1,220,000
0.572
697,539
3,483,074

1,220,000
0.497
606,556
4,089,629

$
$
$
$

$
$
$
$

$
$
$
$

$
$
$
$

$0
($260,000)
0.432
($112,405)
($4,358,966)

1,220,000
0.432
527,440
4,617,069

($1,814,319)

($1,183,104)

($634,221)

($156,931)

$258,103

$725,898
($1,814,319)

$631,216
($1,183,104)

$548,883
($634,221)

$477,290
($156,931)

$415,034
$258,103

Year
10

11

$0
($260,000)
0.376 $
($97,744)
($4,456,709)

$0
($260,000)
0.327 $
($84,994)
($4,541,704)

$0
($260,000)
0.284 $
($73,908)
($4,615,612)

$0
($260,000)
0.247 $
($64,268)
($4,679,880)

$
$
$
$

1,220,000
0.376
458,643
5,075,712

1,220,000
0.327
398,820
5,474,532

1,220,000
0.284
346,800
5,821,332

1,220,000
0.247
301,565
6,122,898

$
$
$
$

$
$
$
$

$
$
$
$

$
$
$
$

$0
($260,000)
0.215
($55,885)
($4,735,765)

1,220,000
0.215
262,231
6,385,128

$619,003

$932,829

$1,205,721

$1,443,018

$1,649,363

$360,900
$619,003

$313,826
$932,829

$272,892
$1,205,721

$237,297
$1,443,018

$206,345
$1,649,363

12

13

14

15

16

$0
($260,000)
0.187 $
($48,596)
($4,784,361)

$0
($260,000)
0.163 $
($42,257)
($4,826,618)

$0
($260,000)
0.141 $
($36,745)
($4,863,364)

$0
($260,000)
0.123 $
($31,953)
($4,895,316)

$
$
$
$

1,220,000
0.187
228,027
6,613,155

1,220,000
0.163
198,284
6,811,439

1,220,000
0.141
172,421
6,983,860

1,220,000
0.123
149,931
7,133,792

$
$
$
$

$
$
$
$

$
$
$
$

$
$
$
$

$0
($260,000)
0.107
($27,785)
($4,923,101)

1,220,000
0.107
130,375
7,264,167

$1,828,794

$1,984,821

$2,120,497

$2,238,475

$2,341,065

$179,431
$1,828,794

$156,027
$1,984,821

$135,676
$2,120,497

$117,979
$2,238,475

$102,590
$2,341,065

17

18

19

20

$0
($260,000)
0.093 $
($24,161)
($4,947,262)

$0
($260,000)
0.081 $
($21,009)
($4,968,271)

$0
($260,000)
0.070 $
($18,269)
($4,986,540)

$
$
$
$

1,220,000
0.093
113,370
7,377,536

1,220,000
0.081
98,582
7,476,118

1,220,000
0.070
85,724
7,561,842

$
$
$
$

$
$
$
$

$
$
$
$

Total

$0
($3,375,000)
($260,000)
($5,200,000)
0.061
($15,886) ($5,002,426)
($5,002,426) ($94,692,159)

1,220,000 $ 24,400,000
0.061
74,542 $ 7,636,384
7,636,384 $ 7,636,384

$2,430,274

$2,507,847

$2,575,302

$2,633,958

$2,633,958

$89,209
$2,430,274

$77,573
$2,507,847

$67,455
$2,575,302

$58,656
$2,633,958

$2,633,958
$2,633,958

Overall Cash Flow

Breakeven where line inte
$3,000,000
$2,000,000
$1,000,000
$0
0
($1,000,000)
($2,000,000)
($3,000,000)
($4,000,000)

10

11

12

13

all Cash Flow

ere line intersects y=0

Overall Cash Flow

10

11

12

13

14

15

16

17

18

19

20