Question
Assume you are the owner and Chief Financial Officer of Snack Box. You plan to purchase an off the shelf content management system The evaluation
Assume you are the owner and Chief Financial Officer of Snack Box. You plan to purchase an "off the shelf" content management system The evaluation of the CMS will meet some business requirements of Snack Box: Improve employee training and satisfy client training needs: The CMS includes a library of existing human resources training, compliance, and professional development courses or modules. Training is interactive, social, and gamified to provide an incentive to complete the required training. Selected training systems allow authoring and modification of existing courses to meet the needs of various franchisees, products, locations, and compliance requirements. The CMS should have the ability to host multiple differently branded websites for the delivery of training information. You expect to increase the effectiveness of each location as a result. Meet the unique financial needs of the parent firm. The CMS needs to be used across a portfolio of franchise operations offering specialty food items, including custom brewery products and ciders, crepes, waffles and breakfast dinners. Snack Box has reviewed project-specific and firm-wide approaches to determining a weighted average cost of capital to utilize in valuing this project. It has determined that this project has lower firm-specific risk than other projects in which the firm is involved. You have developed the following capital budgeting criteria based on expected project cash flows, as follows: You have determined that the interest rate (risk) assigned to this project is 11% and the maximum allowable payback (PB) and discounted payback (DPB) periods for Snack Box are 3 and 3.5 years, respectively. You have determined that the CMS will increase franchise fees and revenues with normal project cash flows shown as follows:
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