10. The management team has decided to permanently implement remote working for all technical staff. The projected savings for the next five years due to remote working is given in Table P3.1. (i) Using NPV function, compute the present value of the cost savings in cell F5. Correct Answer 10% Rate NPV NPV $333,792.40 Year 1 2. 3 4 5 Table P3.1 Cost Savings $ 10,000 S 85,000 $ 130,000 S 95,000 S 148.000 11. Based on the features, the CRM review committee has recommended the purchase of either CRM1 or CRM3 software. CRM3 is less expensive as compared to CRM1, but the automation features of CRM1 result in higher cost savings in the future years. Initially, CRM1 provides a lower benefit than CRM3, but the benefit increases later. The committee believes that both the CRM software will reach their end of useful life at the end of 5 years. The finance department has projected the potential earnings and savings after the implementation of the CRM Software. You are being asked to compute the net present values for both CRM1 and CRM3 and present your findings to the committee. Cell B17 and C17 has the initial investment for CRM1 and CRM3 respectively. The future years cash flows for CRM1 and CRM3 are in range B18:B22 and C18:022 respectively. Compute the net present values for both CRM1 and CRM3 and recommend which product should be purchased. (i) Write formula to compute NPV for CRM1 and CRM3 in cells F18 and F19 respectively. (ii) In cell F21 choose CRM1 if your recommendation is CRM1; else choose CRM3 if your recommendation is CRM3. 10% Correct Answer Year 0 1 2 3 Cash Flows CRM1 CRM3 $ (15,000.00) $ (12,000.00) $ 2,000.00 $ 3,000.00 $ 2.500.00 $ 3,200.00 $ 3,500.00 $ 3,500.00 Required Rate NPV CRM1 NPV CRM3 INPV CRM1 $ $ (724.58) 888.15 NPV CRM3 4 $ 5,000.00 $ 3,700.00 Your Recommendation Select from the list 5 $ 7,000.00 $ 3,800.00