Cost Benefit of Mountain Bike - Purpose: Cost-Benefit...

Created by: Vina Pham
Last Modified: March 7th, 2017
Purpose : Cost-Benefit Anaylsis for Extreme Mountain Bike
Costs : Contains the Implementation Costs and Maintenance Costs
Benefits : Contains the Recurring Benefits
Cost-Benefit Analysis : Contains the Calculation of the Next Present Value
Break-Even Chart : Contains the Chart Depiciting the Break-Even Point

Implementation Costs Dollar Amount
Software Licenses $500,000
Hardware $75,000
Network and Communication Costs $25,000
Training $25,000
Configuration and Implementation $2,750,000
Total Implementation Costs $3,375,000
Maintenance Costs Dollar Amount
Software Licenses Maintenance Fee $80,000
New IT Employees (2 x 90,000) $180,000
Total Maintenance Costs $260,000

Benefits Dollar Amount
Increased Profits due to Increased Sales $750,000
Reduced Inventory Holding Costs $250,000
Reduction in Clerical Workforce (4 x 55,000) $220,000
Total Benfits $1,220,000

Discount Ratio 0.15
0 1 2 3
Costs:
Implementation Costs $3,375,000 $0 $0 $0
Maintanance Costs $0 $260,000 $260,000 $260,000
PV Factor 1.000 0.870 0.756 0.658
PV of Costs $3,375,000.00 $226,086.96 $196,597.35 $170,954.22
Benefits:
Recurring Benefits $0 $620,000 $620,000 $620,000
PV Factor 1.000 0.870 0.756 0.658
PV of Benfits $0 $539,130 $468,809 $407,660
-$3,375,000.00 $313,043.48 $272,211.72 $236,705.84
-$1,121,640.67
($3,375,000) $360,000 $360,000 $360,000
8.6292%
Net Benfit (Cost)
Overall Net PV (Net PV over 20 years)
Net Benefits (Actual Costs and Benefits)
Internal Rate of Return (Breakeven at End of Timeline)

Years
4 5 6 7 8 9 10 11
$0 $0 $0 $0 $0 $0 $0 $0
$260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000 $260,000
0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.215
$148,655.84 $129,265.95 $112,405.17 $97,743.63 $84,994.46 $73,908.23 $64,268.02 $55,885.24
$620,000 $620,000 $620,000 $620,000 $620,000