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This problem exercise touches on conducting the economic feasibility analysis of a project. You are required to use this template in your analysis, submit solution in excel. Years of Project Year 2022 Year 2023 5 Year 2020 Year 2021 Year 2024 Year 2025 TOTALS Net economic benefit Discount rate Present Value of Benefits Net Present Value of all Benefits 3 7 2.5 points 8 9 10 11 12 13 One-time COSTS Discount rate Recurring Costs Present Value of Recurring Costs Net Present Value of all Costs 2.5 points 14 15 Overall Net Present Value Overall Return on investment 15 2.5 points 2.5 points 10 points 17 Economic Benefit Analysis Objective: This project provides you with an opportunity to use spreadsheet software to use the NPV technique to analyze the return on an investment for a computer-aided design (CAD) system. Case Background: My company would like to invest in a new CAD system that requires purchasing hardware, software, and networking technology, as well as expenditures for installation, training, and support. Management has provided your team some tables showing each cost component for the new system as well as annual maintenance costs over a five-year period. Using the data provided in these tables, create a worksheet that calculates the costs and benefits of the investment over a five-year period. Use the worksheet to calculate the following 1. NPV of all benefits and costs (assume a discount rate of 5%). 2. Overall NPV 3. Return on investment What is CAD system? The full name of CAD system is Computer-aided Design (CAD) system. It is the use of computer systems to assist in the creation, modification, analysis, or optimization of a design. The rationale of my company's management to establish this system is to replace our labor force by computerization in the daily operation. By doing this, our company can reduce labor costs, and increase the gross profits as the final goal. Objectives of our Company to Establish the new CAD System: The system is expected to be completed at the end of year 0 (2020). From 2021 to 2025, the new system is expected to reduce labor costs by $250,000 per year and to increase gross revenue $ 150,000 per year. The following Tables 1 and 2 show each cost component for the new CAD system as well as annual maintenance costs over a five-year period. Table 1 - CAD System Components Year 0 Costs Item Quantity Cost/each Hardware PCs 50 $1,700 Network Cards 50 $50 Servers $3,000 N Color Laser Printers 3 $5,500 Color Laser Plotters 2 $3,100 Telecommunications Backup Unit $1,200 Cabling w/plugs 2,000 feet $0.75/foot Routers w/Firewall 2 $500 Switches N $700 Telephone Connection Costs $5,000 Software CAD Software 50 licenses $3,500/license Database 50 licenses $80 Network 50 licenses $70 Office Software 50 licenses $250/license reener Services In-house Trainer 1 $50,000 AutoCAD Training 50 hours $75/hour In-house Systems Personnel 1 $75,000 Table 2 - Estimated Annual Maintenance Costs 2021 2022 2013 2024 2025 PCs $5,000 $5,000 $5,000 $5,000 $5,000 Network cards $500 $500 $500 $500 $500 Servers $1,000 $1,000 $1,000 $1,000 $1,000 Color laser printers $500 $500 $500 $500 $500 Plotters $500 $500 $500 $500 $500 Tape Backup $500 $500 $500 $500 $500 Cabling w/plugs (in feet) $100 $100 $100 $100 $100 Routers w/firewall $100 $100 $100 $100 $100 Switches $100 $100 $100 $100 $100 Telephone connection costs $1,000 $1,000 $1,000 $1,000 $1,000 CAD software $1,000 $1,000 $1,000 $1,000 $1,000 Database $500 $500 |$500 $500 $500 Network $500 $500 $500 $500 $500 Office software $1,000 $1,000 $1,000 $1,000 $1,000 In-house trainer $40,000 $30,000 $20,000 $10,000 $10,000 Sreener In-house trainer $40,000 $30,000 $20,000 $10,000 $10,000 AutoCAD training $1,000 $1,000 $1,000 $1,000 $1,000 In-House systems personnel $75,000 $76,000 $77,000 $79,000 $82,000 Upload Choose a File This problem exercise touches on conducting the economic feasibility analysis of a project. You are required to use this template in your analysis, submit solution in excel. Years of Project Year 2022 Year 2023 5 Year 2020 Year 2021 Year 2024 Year 2025 TOTALS Net economic benefit Discount rate Present Value of Benefits Net Present Value of all Benefits 3 7 2.5 points 8 9 10 11 12 13 One-time COSTS Discount rate Recurring Costs Present Value of Recurring Costs Net Present Value of all Costs 2.5 points 14 15 Overall Net Present Value Overall Return on investment 15 2.5 points 2.5 points 10 points 17 Economic Benefit Analysis Objective: This project provides you with an opportunity to use spreadsheet software to use the NPV technique to analyze the return on an investment for a computer-aided design (CAD) system. Case Background: My company would like to invest in a new CAD system that requires purchasing hardware, software, and networking technology, as well as expenditures for installation, training, and support. Management has provided your team some tables showing each cost component for the new system as well as annual maintenance costs over a five-year period. Using the data provided in these tables, create a worksheet that calculates the costs and benefits of the investment over a five-year period. Use the worksheet to calculate the following 1. NPV of all benefits and costs (assume a discount rate of 5%). 2. Overall NPV 3. Return on investment What is CAD system? The full name of CAD system is Computer-aided Design (CAD) system. It is the use of computer systems to assist in the creation, modification, analysis, or optimization of a design. The rationale of my company's management to establish this system is to replace our labor force by computerization in the daily operation. By doing this, our company can reduce labor costs, and increase the gross profits as the final goal. Objectives of our Company to Establish the new CAD System: The system is expected to be completed at the end of year 0 (2020). From 2021 to 2025, the new system is expected to reduce labor costs by $250,000 per year and to increase gross revenue $ 150,000 per year. The following Tables 1 and 2 show each cost component for the new CAD system as well as annual maintenance costs over a five-year period. Table 1 - CAD System Components Year 0 Costs Item Quantity Cost/each Hardware PCs 50 $1,700 Network Cards 50 $50 Servers $3,000 N Color Laser Printers 3 $5,500 Color Laser Plotters 2 $3,100 Telecommunications Backup Unit $1,200 Cabling w/plugs 2,000 feet $0.75/foot Routers w/Firewall 2 $500 Switches N $700 Telephone Connection Costs $5,000 Software CAD Software 50 licenses $3,500/license Database 50 licenses $80 Network 50 licenses $70 Office Software 50 licenses $250/license reener Services In-house Trainer 1 $50,000 AutoCAD Training 50 hours $75/hour In-house Systems Personnel 1 $75,000 Table 2 - Estimated Annual Maintenance Costs 2021 2022 2013 2024 2025 PCs $5,000 $5,000 $5,000 $5,000 $5,000 Network cards $500 $500 $500 $500 $500 Servers $1,000 $1,000 $1,000 $1,000 $1,000 Color laser printers $500 $500 $500 $500 $500 Plotters $500 $500 $500 $500 $500 Tape Backup $500 $500 $500 $500 $500 Cabling w/plugs (in feet) $100 $100 $100 $100 $100 Routers w/firewall $100 $100 $100 $100 $100 Switches $100 $100 $100 $100 $100 Telephone connection costs $1,000 $1,000 $1,000 $1,000 $1,000 CAD software $1,000 $1,000 $1,000 $1,000 $1,000 Database $500 $500 |$500 $500 $500 Network $500 $500 $500 $500 $500 Office software $1,000 $1,000 $1,000 $1,000 $1,000 In-house trainer $40,000 $30,000 $20,000 $10,000 $10,000 Sreener In-house trainer $40,000 $30,000 $20,000 $10,000 $10,000 AutoCAD training $1,000 $1,000 $1,000 $1,000 $1,000 In-House systems personnel $75,000 $76,000 $77,000 $79,000 $82,000 Upload Choose a File