Pine Valley Funiture

Economic Feasibility Analysis

Customer Tracking System Project
Year of Project
Year0 Year1 Year2 Year3 Year4 Year5 Totals
Net economic benefit $0 $50,000 $50,000 $50,000 $50,000 $50,000
Discount Rate (12%) 1.0000 0.8929 0.7972 0.7118 0.6355 0.5674
PV of benefits $0 $44,643 $39,860 $35,589 $31,776 $28,371

NPV of all Benefits $0 $44,643 $84,503 $120,092 $151,867 $180,239 $180,239

One-time Costs ($42,500)

Net economic cost $0 ($28,500) ($28,500) ($28,500) ($28,500) ($28,500)
Discount Rate (12%) 1.0000 0.8929 0.7972 0.7118 0.6355 0.5674
PV of cost $0 ($25,446) ($22,720) ($20,286) ($18,112) ($16,172)

NPV of all cost ($42,500) ($67,946) ($90,666) ($110,952) ($129,064) ($145,236) ($145,236)

Overall NPV $35,003

Overall ROI 0.24

Break-even Analysis Year of Project

Year0 Year1 Year2 Year3 Year4 Year5
Yearly NPV Cash Fl ($42,500) $19,196 $17,140 $15,303 $13,664 $12,200
Overall NPV Cash Fl ($42,500) ($23,304) ($6,164) $9,139 $22,803 $35,003
Break even point is 0.4027833
Actual break-even occurred at 2.4 year
Pine Valley Funiture
Economic Feasibility Analysis
Customer Tracking System Project
Year of Project
Year0 Year1 Year2 Year3 Year4 Year5 Totals
Net economic benefit $0 $85,000 $85,000 $85,000 $85,000 $85,000
Discount Rate (12%) 1.0000 0.8929 0.7972 0.7118 0.6355 0.5674
PV of benefits $0 $75,893 $67,761 $60,501 $54,019 $48,231

NPV of all Benefits $0 $75,893 $143,654 $204,156 $258,175 $306,406 $306,406

One-time Costs ($75,000)

Net economic cost $0 ($35,000) ($35,000) ($35,000) ($35,000) ($35,000)
Discount Rate (12%) 1.0000 0.8929 0.7972 0.7118 0.6355 0.5674
PV of cost $0 ($31,250) ($27,902) ($24,912) ($22,243) ($19,860)

NPV of all cost ($75,000) ($106,250) ($134,152) ($159,064) ($181,307) ($201,167) ($201,167)

Overall NPV $105,239

Overall ROI 0.52

Break-even Analysis Year of Project

Year0 Year1 Year2 Year3 Year4 Year5
Yearly NPV Cash Fl ($75,000) $44,643 $39,860 $35,589 $31,776 $28,371
Overall NPV Cash Fl ($75,000) ($30,357) $9,503 $45,092 $76,867 $105,239
Break even point is $0.76
Actual break-even occurred at 1.76 year
Pine Valley Funiture
Economic Feasibility Analysis
Customer Tracking System Project
Year of Project
Year0 Year1 Year2 Year3 Year4 Year5
Net economic benefit $0 $50,000 $55,000 $60,000 $65,000 $70,000
Discount Rate (10%) 1.0000 0.9091 0.8264 0.7513 0.6830 0.6209
PV of benefits $0 $45,455 $45,455 $45,079 $44,396 $43,464

NPV of all Benefits $0 $45,455 $90,909 $135,988 $180,384 $223,848

One-time Costs ($90,000)

Net economic cost $0 ($40,000) ($40,000) ($40,000) ($40,000) ($40,000)
Discount Rate (10%) 1.0000 0.9091 0.8264 0.7513 0.6830 0.6209
PV of cost $0 ($36,364) ($33,058) ($30,053) ($27,321) ($24,837)

NPV of all cost ($90,000) ($126,364) ($159,421) ($189,474) ($216,795) ($241,631)

Overall NPV

Overall ROI

Break-even Analysis Year of Project

Year0 Year1 Year2 Year3 Year4 Year5
Yearly NPV Cash Fl ($90,000) $9,091 $12,397 $15,026 $17,075 $18,628
Overall NPV Cash Fl ($90,000) ($80,909) ($68,512) ($53,486) ($36,411) ($17,783)
Project break-even will not occur during the life of this system
Totals

$223,848

($241,631)

($17,783)

-0.07