This project provides you with an opportunity to use spreadsheet software to use the capital budgeting models discussed in Chapter 14 of the Laudon textbook to analyze the return on an investment for a new computer-aided design (CAD) system. Please refer to the tables below, showing each cost component for the new system as well as annual maintenance costs over a five-year period. Also review the Learning Track on capital budgeting models included later in this document. Your company would like to invest in a new computer-aided design (CAD) system that requires purchasing hardware, software, and networking technology, as well as expenditures for installation, training, and support. You believe the new system will reduce the amount of labor required to generate designs and design specifications, thereby increasing your firms annual cash flow. 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. Using the data provided in these tables, create a worksheet (Microsoft Excel is preferred) that calculates the costs and benefits of the investment over a five-year period and analyzes the investment using each of the four capital budgeting models presented in Chapter 14 and in the Learning Track included below: Payback period indicate yearly and cumulative figures for years 2021-2025 Accounting Rate of Return on Investment (ROI). Assume depreciation to be the total initial cost of the investment in Year 0. Net Present Value, assuming an interest rate of 5% Internal Rate of Return Once you complete the worksheet and your analysis, write an executive summary (one to three double-spaced pages) of your findings and recommendations, which should answer the question, Is this investment worthwhile? Why or why not? Your assignment submission should include two files. One should be your Excel worksheet(s) file, and the other should be your executive summary and recommendations in a Word document. 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 Costeach Hardware PCs 50 $1,700 Network Cards 50 $50 Servers 2 $3,000 Color Laser Printers 3 $5,500 Color Laser Plotters 2 $3,100 Telecommunications Backup Unit Cabling w/plugs Routers w/Firewall Switches Telephone Connection Costs 2,000 feet 2 2 $1,200 $0.75/foot $500 $700 $5,000 Software CAD Software Database Network Office Software 50 licenses $3,500/license 501 licenses $80 50 licenses $70 50 licenses $250/license Services In-house Trainer AutoCAD Training In-house Systems Personnel 50 hours $50,000 $75/hour $75,000 Table 2 - Estimated Annual Maintenance Costs 2021 2022 2023 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 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 Table 1 - CAD System Components Year 0 Costs Item Quantity Costeach Hardware PCs 50 $1,700 Network Cards 50 $50 Servers 2 $3,000 Color Laser Printers 3 $5,500 Color Laser Plotters 2 $3,100 Telecommunications Backup Unit Cabling w/plugs Routers w/Firewall Switches Telephone Connection Costs 2,000 feet 2 2 $1,200 $0.75/foot $500 $700 $5,000 Software CAD Software Database Network Office Software 50 licenses $3,500/license 501 licenses $80 50 licenses $70 50 licenses $250/license Services In-house Trainer AutoCAD Training In-house Systems Personnel 50 hours $50,000 $75/hour $75,000 Table 2 - Estimated Annual Maintenance Costs 2021 2022 2023 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 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