Cost and benefit analysis

Online camping spot reservation system

(a) List benefits (estimates of tangible and intangible benefits)
Intangible benefits:

 Less cost compared to normal in-person process

 Higher Flexibility – our system aims to provide more and better camping spots for users,
and users can book from their place at home
 Interactive user experience
 customer satisfaction
 Providing maps directing to camp sites
 Brand awareness – friends/family sharing their experience on social media
Tangible benefit:
……

(b) List costs (development cost, operating cost)

Estimated One - Time Development costs:

Hardware and software Cost $5000

Equipment’s (setups for camp sites) $3500
Departments (IT, Finance, Marketing, $16000
Forest/Camp)
Design system (30 days@ $320/day) $9600
Programming (70 days @ $330/day) $23100
batch processing (3 hours @ $1100/hour) $3300
Beta testing (5 days @ 100/day) $500
Installation (8 days @ $320/day) $2560
User Training (5 days @ $200/day) $1000
Trainer (5 @ 320/day) $1600
Contingency $4000
Total Estimated development cost $ 69,160

Annual Operating Cost

Costs on maintaining the camp sites $15000

Online Processing of Reservation (Goal is to $10000
provide unlimited bookings/reservation for
clients)
 Secure payment feature $5000
Monthly reports on reservation system $300
($25/month) – (to see how the business is
doing, and to business strategy
System/program maintenance $8000
On-Line Storage $1000
Hardware and software maintenance $3500
Contingency $6000
Total Estimated Annual operating cost $48800

(c) Comparison of costs versus benefits (cost-benefit analysis, NPV, BEP, ROI)

Category Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 5 year total

Value of benefits
Discount factor 0.9091 0.8264 0.7513 0.6830 0.6209
(10%)
Present Value of
benefits
Development costs $ 69,160
Ongoing costs $48800 $48800 $48800 $48800 $48800
Discount 0.9091 0.8264 0.7513 0.6830 0.6209
factor(10%)
Present value of $44364 $40328 $36663 $33330 $30300 $184985
costs
PV of Net benefits
and costs
Cumulative of
NPV
Payback period
5 year return of
investment