Question
1- in order to determine the effect of implementing the CRM project you will need to isolate the incremental cash flows. This can be done
1-
in order to determine the effect of implementing the CRM project you will need to isolate the incremental cash flows. This can be done by preparing a baseline projection for the time period in question. On the "Baseline Projection" sheet you will need to continue the historical income statement forward another five years. Using the model built for FYs 2015-2018 determine the appropriate projection values for each of the line items. For some items you will need to determine historical growth rates or ratio trends, for others you will simply need to continue the accounting formulas. By looking at the data and formulas in each of the cells and lines you will be able to work through these. As this is the baseline you will have no data in the "Incremental..." lines.
- Now you must determine the effect of implementing the CRM project. Using your projections from the "Baseline Projection" you will now have to account for the incremental impact of the project. Consult the "Data and Assumptions" sheet and use that information to build out your "CRM Investment" sheet.
- With full projections for the Baseline Projection and CRM Investment completed, you can now isolate the incremental changes in cash flow per year. Fill this information in on the "Calculation" sheet. You will then need to take that data and complete both an NPV and IRR analysis. The results of each of these analyses should influence your recommendation to pursue the project.
- Submit a word document with a short report summarizing your process and recommendations. While there is no standard format you should follow use your own judgement on making this appear like a professional memo you would be sending to a boss or decision maker. Assume that this report is the first time they're hearing about the possible project.
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